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Russia: the bankers scrimped on the credit funds for "mushroom" project
LLC "Firma "Start" in Voronezh, managed by Alexander Kubakhov, suspended the beginning of the construction of the substrate production plant for the indefinite term. The plant was supposed to have the capacity of 17,500 tons of the mushroom substrate production per year; $ 5 mln. of the investments were required to implement this project. In the interview to the journalists of "Kommersant" the company representatives explained this situation by the fact that the banks were not willing to credit the project. The experts point out that the plant would have no problems with the sales markets because of the deficit for the quality substrate. The bankers explain the decline of the project financing because of its specifics, and also by the fact that Mr. Kubakhov counts exclusively on the loaned funds with no personal investments.
Mr. Kubakhov, General Director of "Start" firm, confirms that he is not able to start the construction of the plant for the oyster mushrooms substrate. The firm was intended to construct the enterprise, which was designed for 17,500 tons of the substrate production per year. The required investments amounted to around $ 5 mln. According to Mr. Kubakhov, the project will pay back in not more than 4 years (according to the tentative calculations, the net profit was expected to reach RUR 35 mln. per year). "To construct the plant, we signed a contract for a long-term rent of 6.6 ha in Ramonskiy district. We also signed a contract worth to $2 mln. with Dutch firm Christiaens Controls B. V. for the equipment supply. But, the negotiations regarding the credit funds raising came to a deadlock", Mr. Kubakhov explained. According to his information, the banks require the collateral with 1.5 coefficient to issue a loan; but, "Start" does not possess the property worth to the sum of $7.5 mln. "I negotiated with Vladimir Kulakov, the Governor, and asked him to have the State Property Department to select the property units of the regional loan fund, which may become the warranty for our party to sign an agreement with the bank", the businessman explained. He added that he failed to get the governmental support. Vladimir Levin, the First Deputy Chief of the Senior State Property Department explained that the property of the regional loan fund has been transferred to the state enterprises and institutions during two recent years. "Now we can offer just gas utilities as a loan, but the banks do not accept them", Mr. V. Levin observed.
Alexey Tishenkov, the Senior Specialist of LLC "SHG-2000" consulting company informed that around 5,000 tons of the oyster mushroom were grown past year in Russia; the deficit for the quality substrate amounts to around 15,000 tons per year only on the territory of Central Russia. "The need for the substrate will increase - the oyster mushroom production is forecasted to double in the nearest 5 years", the expert pointed out. Igor Budkov, the Senior Economist of "Voronezhskiy greenhouse complex" (this enterprise annually produces more than 200 tons of champignons and over 50 tones of oyster mushrooms) informed, that at the present moment the enterprise produces the substrate by own means. "I admit the possibility that we buy this product at "Start" plant, if the company produces quality and inexpensive substrate", he confirmed.
Pavel Gurov, the Deputy General Director of Closed JSC "Biagro-Product" (Moscow mushroom production complex) agreed that the "Start" project is in demand. "The market approached the stage when the production of the initial and the ready products is diversified: some companies professionally prepare the substrate, the others grow mushrooms", Mr. Gurov explained.
Alexander Udovicheko, the Manager of Svyazbank representative office in Voronezh, pointed out that the project of LLC "Start" seems quite perspective. "However, to my opinion, Alexander Kubakhov and his plant are somewhat ahead of time - at the present moment nobody in the region is ready to finance such an unusual production", Mr. Udovichenko is sure.
Yuri Yachniy, the Director of the Department of Investments and Project Financing of the Central-Chernozemniy bank, Sberbank of Russia, informed that Mr. Kubakhov contacted the organization with the request to loan funds for the plant construction. "However, according to our requirements the company itself should invest not less than 30% of the total sum of the investments to the project; Mr. Kubakhov failed to cooperate on such terms", Mr. Yachniy said. He agrees that the idea of LLC "Start" is quite specific. "Some time ago Alexander Kubakhov was the pioneer of the cellular communication systems in this region. I admit the possibility that he becomes the pioneer of the substrate market", Mr. Yachniy concluded.
The problem to purchase the quality substrate is quite urgent for the mushroom growers of Russia and Ukraine. The leading specialists of the mushroom industry will answer this and other important questions of the mushroom production, processing and sales during the III international conference-exhibition "Mushroom Industry 2008", organized by "Fruit-Inform" project on the 10th-12th of June in Kyiv in the National Complex "Expocenter of Ukraine". To participate in the event, please fill in the registration form.