IBobserver 8

An Expert's View about Business Administration in Ukraine

Posted on: 23 Aug 2012

The new issue of IBobserver has been released!

Trends in Development of IBcontacts becomes ECA in Ukraine: Revival of Pig Breeding Agricultural Insurance in Sector in Ukraine a member of FEBIS to be or not to be? Ukraine 7 5 6 7 ment IBobserver №8 / ibcontacts.com.ua International Trade Develop concept, though actually it is an embodiment of several Credit Rating – Advantage components that are close to Business against all the odds my personality: investment, Advantages of a credit rating assignment in developing international law, and marketing. Every eld is dicult, if you international trade and attracting nance. work diligently. Our company is mainly associated with attracting Today, when dierences in Western countries clearly direct international nance. is the development of nations demonstrates the above- is a signicant part of our work and their economies stand mentioned dierence, for indeed. in stark contrast, the role of companies engaged in export- But we always look broader credit ratings for buyers, sellers, import activities obtaining at the objective and we work to issuers and investors may not a credit rating is no longer a achieve the strategic goal of any be overestimated. Even in the “compulsory requirement”, but a business owner - the development Ukrainian economy, whose necessity. 4 of business at the international development compared to level. is is a comprehensive concept that covers complex preparation of Ukrainian companies to enter international capital markets. It includes Due Diligence, structuring of business and corporate governance, and the implementation of international projects with a view to attracting debt capital. We prepare a full range of business documentation, develop export and import activities of our clients, as well as raise awareness about them in Ukraine and abroad. – Why is international nancing so important for Ukrainian companies? – e involvement of external debt capital allows Ukrainian companies to signicantly reduce their interest rates (up to 10-11% all-in in euros). And importantly, it doesn’t require collateral. e term of such long-range nancing Latest credit ratings assigned by may vary from 5 to 20 years. In addition, once the company has IBcontacts conducted such a project, it forms An interview with IBcontacts Managing Director Ms. Kateryna Barabash. its international credit history, Long-Term Credit Ratings and thus much more protable e issue of attracting creative way. As it is said, we are experience and ideas were nancial terms become available nance is crucial for developing free as much as we want. accumulating... And there arrived to it. Group of Companies KSG Agro S.A. uaА+ Ukrainian enterprises and is oen I started working when I was the moment, when all the puzzles Moreover, attracting direct the decisive factor in choosing een. I was working at a radio matched. As Dostoevsky said, export and project nancing is a ALC ZhL uaBBB a foreign manufacturer or station then. At the age of eighteen ‘‘It is enough to have one self- part of the strategic development general contractor for a project. I was in charge of a department dependent desire…’’ of a company abroad and is Obviously, 2011 there were no of an advertising and printing At the age of 25, I became a considered as a preliminary stage Short-Term Credit Ratings positive trends in corporate agency. Aerwards I obtained a co-founder of an information for an IPO. lending in Ukraine, while long- Master’s degree in International and rating agency. Two years later – Many managers come to TOV Ovostar Union uaK2 term (investment) credits became Law and gained rich professional I founded my own company – you with problems of a global unfeasible indeed. In this regard, experience in international IBcontacts. It became a successful nature. For example, one that TOV Ivo-Kom uaK2- regional companies are seeking to organizations, manufacturing embodiment of my experience touches upon the inuence of the diversify sources of nance and companies, consulting rms, and and knowledge, as well as the country’s reputation or the image TOV Venta. Ltd uaK3 focus their fundraising activities in an investment bank. I was lucky result of accumulated ideas about of our companies abroad… How on international capital markets. enough to live and work both Ukrainian business development can one deal with it? TOV Servisoptorh uaK3 abroad and in dierent parts of on the international arena. – Nowadays, it is dicult for – Kateryna, what led you to Ukraine: in the east - in Lugansk, Ukrainian companies to gain the create your own business? in the west - in Lviv and later - in – Why did you decide to work PP Arteziia uaK3- credibility of foreign partners. – I had this idea to set up my Kyiv. is gave me a multifaceted in international nancing, which Yet there exist ways to prove that own business long time ago. It understanding of mentality, is quite a dicult area? there are many companies in TOV Planeta Obladnannia uaK3- is really easy, when you enjoy culture and business. – International nancing is Ukraine worth dealing with. 2 working and take the world in a As time went on: knowledge, commonly considered a limited TOV TDS Ukraina uaK3- Divide et Impera or operate? e role of corporate management in entering the international capital market. In the CIS, where the market So, what is corporate economy only now arises, the management for big business culture of business management owners – necessity or a formality? traditionally gets little attention. We hold to the opinion that at Oen decisions are made by an a certain milestone a new level owner individually without prior of corporate management is discussion with key managers and, vital due to the increase in the moreover, without the director, number of specialists, complexity who legally bears material or of processes, projects and even criminal responsibility. extensions of the planning period. is scheme may work for small It is also a must when entering companies with quite simple international capital markets. organizational and production Transparent decision making and processes, but for companies power-sharing, open and diverse claiming a large international discussion of strategic issues, status or interested in entering independent control of the cash the international capital market ows from the auditing body, there are dierent demands from the presence of both genders in lenders and portfolio investors. management... 3 2 8 / IBobserver / www.ibcontacts.com.ua InTERnATIonAl FInAnCIng Accounting & Consulting From page 1 international capital markets. Business against all the odds e list of our clients in Ukraine includes ZhL, KSG Agro, Listings according to Trade Landgut group of companies An interview with IBcontacts Managing Director Ms. Kateryna Barabash. (‘From Good Chicken’ ), & Forfaiting Review Global Vikoil Ltd Geophysical Service newspaper unites key market Company, Energomashspetsstal players in Ukraine and abroad Private joint stock company, Contacts Directory 2012/13 with a view to jointly analyzing Ergopack (‘Melochi Zhizni’ ), the most important aspects of VARUS supermarkets, e Meat business development and capital Processing and Packing Factory attraction. of Enakievo, International Group – e market is not well- of Seafood (‘Flagman’ ), as The London Trade developed. ere is a necessity well as companies working in the though. erefore, there should oil and gas industries, the motor- Group be competitors. Do you have vehicle industry, and pharmacy Richard Willsher them now? and energy-saving technologies. Director – At present we are unique In addition, our clients are because of the range of services foreign manufacturers, banks, Unit 223 we provide, and thanks to our credit and insurance corporations, Aberdeen Centre status as an authorized company. and ECAs, among which there 22-24 Highbury Grove We conduct credit investigations are some of the biggest in the London N5 2EA England Tel: 020 7424 5757 Foreign lenders and insurance companies are www.londontrade.co.uk really open towards Ukrainian business and are OPUS willing to fund it directly Some people mistakenly – What diculties did you Advisory Services believe that international capital experience while establishing International Inc markets are dicult to achieve the business? Are the diculties Demica Limited of Ukrainian enterprises at the world: ECAs Euler Hermes Alexander Malaket due to the insucient level of your company faces dierent request of foreign ECAs that cover (Germany), Korean ECA K-sure, Phil Kerle CITP President creditworthiness of Ukrainian today? the nancial risks of foreign banks Hungarian ECA MEHIB, CEO companies, and that it is a – e main diculty is and suppliers during nancing. Norwegian ECA GIEK, Kazakh Suite 350 Crowne House long and complex procedure. unawareness of the market. e At the same time, the services ECA KazExportGarant and many WTC 1 First Canadian Place But it is not. Foreign lenders need for diversication of nance market, including nancing, others. 55-58 Southwark Street Toronto and insurance companies are sources has existed for a long is developing rapidly. I highly London SE1 1UN Ontario M5X 1C1 really open towards Ukrainian time in many companies, but few support it when companies that – How does the IBcontacts England Canada business and are willing to fund it of them are aware of possibilities appear on the market honestly and team, as well as yourself, manage Tel: 020 7450 2500 Tel: 001 647 680 6787 directly without involving a local that emerge at the international competently conduct business, to achieve good results? Fax: 020 7407 5825 underwriting bank. level. rather than benet from their – Our work is pretty complex, Oliver Wyman www.demica.com e most important thing is Because of this, IBcontacts clients’ unawareness. it requires dierent core Michael Wagner to keep a dialogue with foreign has organized two large-scale DRUM Risk Management competencies that we possess. Partner – Financial Services – How do you treat clients? e IBcontacts team consists of Limited Who are they? top lawyers, nanciers, market 1166 Avenue of the Americas Peter Hopkins We always look broader at the objective and – We have had most of our analysts, marketing specialists and New York City Managing Director clients for a long time already. We project managers who have gained we work to achieve the strategic goal of any New York 10036-2708 have good business relations with work experience in Ukraine as 150 Fenchurch Street United States of America business owner - the development of business each of them. We sincerely inquire well as overseas. is enables us London EC3M 6BB Tel: 001 646 364 8991 at the international level about their needs and achieve to solve the complex and oen England michael.wagner@oliverwyman.com the set goals together. is is the unconventional tasks our clients Tel: 020 7929 2473 www.oliverwyman.com reason IBclub was established. need and to provide services Fax: 020 7929 2480 investors and lenders, who will educational events under the IBclub is an informal professional according to a ‘one-stop shop’ IBcontacts peter.hopkins@drumrisk.com be interested in the reliability of aegis of the Ministry of Economic association of our partners and principle, which is so important www.drumrisk.com Anna Dzhenkova the information provided, the Development and Trade of clients, aimed at exchanging useful for modern entrepreneurs. Head of Communications level of corporate governance, Ukraine. In 2011, two international information, conducting business Mo Risk Resolution Group reover, our business is transparent group structure, and seminars with the world largest meetings and working discussions. mainly dependent on reputation – (R2G) Business Centre «Botanic Towers» payment discipline rather than export credit agencies, Euler We receive good you should be known and trusted. 6th Floor Hugo Williamson errors in company activities. Hermes (Germany) and Atradius recommendations from various Our good reputation is pretty 119 Saksaganskogo Street Managing Director When all the conditions are (the Netherlands), were conducted Ukrainian and foreign companies much what lets our team carry Kiev 01032 honored, the only thing that under the auspices of the Embassy operating in dierent elds. All out the most dicult projects all 67 Grosvenor Street Ukraine needs to be done is to competently of Federal Republic of Germany of them are constantly provided over the world in a timely manner. London W1K 3JN Tel: 00 380 44 359 0200 prepare the necessary project and the Embassy of the Kingdom services by IBcontacts in the England Fax: 00 380 44 359 0219 documentation, to conduct talks of the Netherlands in Ukraine. eld of nancial engineering Published in ‘TOP 100: Best Tel: 07811486047 ad@ibcontacts.com.ua and to present a business. In addition, we publish the and structuring of business for Ukrainian Companies’ Magazine www.riskresoluliongroup.com www.ibcontacts.com.ua IBobserver periodical. e the purpose of gaining access to 1, April 2012. kind of transaction – it needed companies from the CIS face with Ukraine’s political own goals to hold its head up in its export similar nancing obstacles – and but its entrepreneurial spirit and markets with good-quality demonstrates how trade nance determination to improve exports reliable merchandise. Zhl is now on the ground is making a real is a step in the right direction. building an additional factory dierence to one business and a supplied with the new equipment Sweet trade from various countries to boost produ The deal is a striking example of managing this ction. up, I was reminded of the uphill he would have got in Ukraine with Negotiations took six months particular country risk battle ordinary businesses have in no collateral requirement. With with some 800 letters being doing any international trade at all. manufacturing machinery that had exchanged between the parties Yevgen Gamov, managing not been updated since 1960s Soviet before the ink was dry on the wider national economy. Published in: Trade & director of Zhl, heads up one of the Union days, the confectioner’s contract. But the deal has set a It will take more than a football Forfaiting Review Magazine, top ve companies in the Ukrainian long-term viability turned on this precedent for other medium-sized tournament to turn around Volume 15, Issue 8, June 2012 confectionary market and had, Clarissa Dann in December 2011, concluded a Editor, Trade and Forfaiting Review EUR1.3m (US$1.5m) export credit agency-backed export nance deal with Rabobank. ere’s nothing like a football e rst tranche of this facility tournament to cut through had just been drawn down on 17 propaganda. When tickets for May. With an OECD country risk England’s games in Euro 2012 went classication of seven, collateral on the market for as little as GBP14 requirements of 200% to 300% (US$22) it was clear football fans and interest rates on the Ukrainian were not impressed with Ukraine’s UAH of 30% per annum, domestic new stadiums hotels, roads and companies like this one have a very airports. Political unrest and racial hard time accessing cost-eective tensions have turned them o. nance. ey are not, aer all, on Former prime minister Yulia the same playing eld as mighty Tymoshenko is currently serving Ukrainian iron ore producers a seven-year sentence for ‘abuse Metinvest and Ferrexpo. And it of oce’; charges condemned by doesn’t help that in 2010 exporters the west as a politically-motivated that delivered goods to Ukraine abuse of human rights. And, on received EUR447m (US$558m) negotiations took six months with some 800 letters being exchanged between the parties before the ink was dry on the contract 24 May, the Ukrainian parliament of insurance payouts. IBcontacts’ descended to sticus over the coordination of such a long-term proposed elevation of Russian to nance deal for a local buyer was a ‘ocial’ language status. striking example of managing this Just as I had been invited particular country risk. as a speaker by international Sitting beside me as the other trade development consultants guest speaker, Gamov shared how Press lunch devoted to the nomination of the ALC ZhL deal for the annual Deal of the Year award by three world IBcontacts to Kiev at the same time theRabobank/Atradius deal gave famous British editions. May 24, 2012, Kyiv. parliament was having its punch- his company rate three times what BEST PRACTICES www.ibcontacts.com.ua / IBobserver / 8 3 once a year. e above requirements are laid out selectively. In any case, it Divide et Impera or operate? is important to scrutinize the code or any other similar document depending on the particular e role of corporate management in entering the international capital market. situation. Our experience shows that implementation of these rules and applied and when is it high for nancial and insurance are global, below you can nd • A clear promotion system for standards are favourable for the time for changes in corporate organizations. the most important examples of directors must be developed, company, represented either by the management? e nature of above documents its requirements, from the UK operated by the Remuneration owner or director. Aer all, a well- e principles of corporate is mainly advisory, but these Corporate Governance Code Committee; developed corporate management management promoted by the ‘‘recommendations’’ de facto structure. • e rights of all shareholders system is signicant not only for above mentioned organizations transform into responsibility for Among others there can be must be granted; the system attracting international nance. are set out in so-called corporate the companies in case of: found following requirements: of regular reporting to Above all, it’s designed to improve Valeriy Liubarskyi management codes. For example, • attracting international • A clear division of authority shareholders shall be developed. the business management system Senior Legal Advisor, Attorney at the UK Corporate Governance nance from IFC, EBRD and between the board and CEO; An annual meeting of itself, to make business more Law, IBcontacts Code adopted by the independent other international nancial • e board of directors shall be shareholders is required at least ecient and stable. regulator of the securities market institutions; elected for a denite period of time and re-elected. It has to act on an ongoing and regular basis; EXPERT OPINION: From page 1 • e board should consist of The business management system makes several independent directors business more efficient and stable who are not engaged in condence in their investments i operational activities;s is a brief outline of world’s (as much as possible taking into m • A clear criteria according to odern corporate management account market conditions) and of the United Kingdom; German • inclusion in the stock exchange which the director is regarded structure. provides them with tools to oversee Corporate Governance Code listing of securities of the issuer as independent; It should be noted that the company’s management, in Germany adopted by the in primary or secondary public • A valid assessment committee, bringing more transparency avoid abuse, and minimize the Government Commission on the oering (IPO or SPO). which determines the to a business, including the consequences of non-ecient initiative of the Ministry of Justice. In practice, the principle eectiveness and independence establishment of a clear corporate decisions and strategies. It also m e Warsaw Stock Exchange ‘‘comply or explain’’ is used in of directors;anagement system, still allows them to participate in applies a Code of Best Practices, most of these cases. For example, • All directors should periodically remains the prerogative of the decision-making according to their approved by its Supervisory a company planning an IPO develop their education and owner. Nevertheless, a number Andrey Dubetsky share. Board. e International Finance on the London Stock Exchange management skills; of corporate management Executive Director, On the other hand, the company Corporation uses a matrix of has to improve its management • e director shall report the principles are considered by Warsaw Stock Exchange Oce that consistently shows such level m corporate management where system in accordance with the results of semi-annual and any key organizations as a of commitment and transparency in return receives a higher level of trust among its shareholders, investors and other institutions of the nancial markets. us, the company provides itself with a ‘‘safety net’’ for periods of falling markets and sustainable – What is the role of development in more favourable qualitatively new corporate ones. management for companies in A higher level of investor IPO/Secondary PO? condence and comfort results in – e quality of corporate a stable level or growth (in case of management can not be fullment of obligations) in the underestimated, not only in primary stock price, which in turn means and secondary placement of shares a stable level or growth in the on stock exchanges, but generally company’s capitalization. when dealing with the company To answer your question, the in which major shareholders and level and scope of embedded the management are willing and corporate management standards able to take responsibility for in a public company is one of the establishing right relationships most important factors inuencing with other shareholders as well as the assessment of a business at with other actors in the market, the time of their IPO/SPO, and such as company’s employees, especially for Ukrainian companies investors, customers, contractors, which contain higher risks for representatives of state bodies, etc. potential investors. And it’s not a pathetic rhetoric, but a living truth which is only in – What is the WSE general its rst phase in Ukraine, while in procedure for considering the Western Europe and America it companies’ compliance with is one of the business behaviour international principals and standards with no proof needed. corporate management demands Domestic companies tend to apply during the IPO? the rules of corporate management – Corporate management just before entering their IPO or, in rules that apply to companies some cases, aer (the latter trend represented in the Warsaw Stock should not serve as a role model). Exchange; listings in both markets In any case, the Warsaw Stock are regulated by two documents. Exchange is trying to persuade e rst one is e Code of best its issuers (and this approach is practices for WSE listed companies enshrined in the stock exchange for companies listed in the WSE regulations on corporate Main Market; e Code of best management) that the requirements dierent requirements are written requirements of the UK annual periods; standard for doing business practices for NewConnect listed and recommendations in this sorted according to company Corporate Governance Code or • A clear system of risk in the global market, among companies is for issuers from area should not be perceived as an level (private company, public provide a compelling rationale management shall be developed, them: the International Finance the WSE alternative market, articial and unpleasant burden company, the company placed for non-compliance (the specic approved and reviewed at least Corporation (IFC), the European NewConnect. to the company’s management. on the stock exchange, nancial conditions of the national once a year; Bank for Reconstruction and So, the Warsaw Stock Exchange We share the best world standards institution, etc.). One of the legislation, market, etc.). • e activities of the Audit Development (EBRD), the stock appears on the stage only aer the that corporate management most important and inuential So, how do the principles set up Commission on a regular basis exchanges in Europe and the completion of the company’s public should be a natural mechanism is «Principles of Corporate in various corporate governance are obligatory; it shall include world, such as Warsaw, Frankfurt, oering of shares and the beginning to ensure all stock market actors Governance» of the Organization codes look like? What will attract at least two independent London, as well as the majority of of their second turn on the market with comfortable and mutually for Economic Cooperation and attention when evaluating a directors and the president of banks and insurance companies exchange. favourable conditions. Development (OECD). is company? Since the activities the company, who may not be in Europe, America and Asia. ese documents dene the On the one hand, the H document is also a guidepost of the London Stock Exchange the chairman;ow are these principles being scope of duties and responsibilities introduction of corporate of public companies, management management standards gives all and supervisory bodies, as well as shareholders (especially minority) EXPERT OPINION: rights that must be provided to all shareholders, without exception, in an equal amount. e Warsaw Stock Exchange such as IFC, EBRD, stock company and to its management Independent directors with rich codes added transparency to rules of corporate management are exchanges)? Please, give a bodies such as the board of professional experience and a the company’s functioning, b guided by the ‘‘comply or explain’’ rief description of the main directors, the supervision board deep knowledge of agriculture both in internal and external principle. is means that in the requirements recommended and the shareholders of the improved the quality of strategic environments. Deeper case of non-compliance with for implementation (decision- company. management decisions by regulation, as well as the quality mak certain requirements of corporate ing procedures, adding a considerable share and transparency of corporate management, a company should appointment of independent – What were the diculties of objectiveness. Minor management have become Ekaterina Pavlovskaya dir provide market information about ectors, etc.). you had had to overcome while inconveniences arise from the the main advantages of the Senior specialist of IR Department, – Our comp the violation with an explanation any has always improving the company’s requirement that the majority of code’s application. Information Group of Companies Ovostar Union p of the causes and the date of issue aid great attention to the quality corporate management the board meetings be held in the availability allows performing o settlement.f corporate management. When (organizational / cultural Netherlands, as three of the four not only a quantitative evaluation It is worth mentioning that the the company’s shareholders issues, mentality peculiarities)? members of the board of directors of the company’s eciency, but de WSE also implements incentive cided to hold a public oering Describe them. live and work in Ukraine. also to specify the general idea o programs for companies that fully f our company on the Warsaw – e shi to international about the environment in which meet WSE corporate management Stock Exchange, the need to adapt standards of corporate – What signicant benets the company operates and to standards. internal corporate management management was a simple step were achieved aer bringing understand the principles of – Whi Additionally, in accordance ch project’s implemen- standards to the requirements for our company. One of the corporate management in Group doing business. e company’s with the yearly results, the boards tation required bringing and regulations of the Warsaw main requirements of the new of companies Ovostar Union to annual report, available on our of public companies represented at the standards of corporate Stock Exchange and the Dutch rules of corporate management, international standards? web site, is an example of a well- mana Co the Warsaw Stock Exchange publish gement up to international rporate Governance Code not previously applied, was the – e transition to the structured document that helps no b reports on their activities in the eld rms (for example, the ecame vital. e requirements introduction of independent non- principles of corporate to give full consideration of the of corporate management. requirements of organizations are applicable both to the whole operational directors to the board. management prescribed by enterprise’s performance. 4 8 / IBobserver / www.ibcontacts.com.ua CREDIT InVESTIgATIon Credit Rating – Advantage Advantages of a credit rating assignment in developing international trade and attracting nance. Latest credit ratings assigned by IBcontacts Long-Term Credit Ratings Yegor Zemziulin Head of Credit Department, Group of Companies KSG Agro S.A. uaА+ IBcontacts ALC ZhL uaBBB From page 1 Short-Term Credit Ratings A credit rating is assigned TOV Ovostar Union uaK2 by an independent professional agency and displays a borrower’s w TOV Ivo-Kom illingness and ability to full uaK2- his obligations to creditors and investors in accordance with TOV Venta. Ltd uaK3 the stipulated pre-conditions. e advantages of using credit TOV Servisoptorh uaK3 ratings are innumerable: • It allows investors to obtain PP Arteziia uaK3- valuable information and agencies (CRA), the rst of such operations, as well as in In addition, the rating assigned consider their risks adequately; which were established in the monitoring existing coverage. directly to an importer is TOV Planeta Obladnannia uaK3- • A solid rating allows a company early 20th century. Credit ratings assigned by adjusted to the level of country to enter new markets and attract Talking about the history IBcontacts are widely used, in risk (‘‘Country Risk Category’’) cheaper funds; of the credit rating agencies, it par TOV TDS Ukraina ticular, by Euler Hermes in accordance with the OECD uaK3- • It may be used as an eective should be noted that until the Deutschland AG in determining seven-category-scale. On this the value of risk premium in scale, a ‘‘1’’ corresponds to the insurance of both long- and lowest risk, which is assigned to Leaders of the credit rating are to the potential investors and short-term transactions with countries such as USA, Germany Group of Companies KSG Agro partners. is credit rating will A credit rating allows companies to enter new Ukrainian importers. or Great Britain, and a ‘‘7’’ is S.A. (uaA + in the long term), ALC contribute to the companies Due to the fact that the highest (e.g. Mongolia, Iran, markets and attract foreign funding ZhL (uaBBB in long term) and issuing corporate bonds, creating Ukraine has a high country Chad, Ukraine). TOV Ovostar Union (uaK2 in the favorable credit histories and risk, information obtained e value categories of short term). Due to the assigned nancial reputations, attracting by Euler Hermes, including importer risk and country risk ratings, companies conrmed investments, and dealing with advertisement for a company; early 90’s, rating activity existed credit ratings, is crucial in the are quite pointedly displayed their creditworthiness, reliability, trade partners and foreign • It encourages the individuals to mainly in the United States. process of decision making in Pic. Overview of Buyer Risk and information transparency suppliers. invest their savings in corporate Nevertheless, the globalization regarding insurance of trading Categories. us, the result securities to obtain higher of nancial markets positively operations with Ukrainian of adjustments of importer prots; inuenced the number of participants. In accordance risk to country risk of a target Credit • A high-quality credit rating agencies, which now exceed 100. company is a credit rating itself. rating Credit Rating Description motivates and supports public Moreover, according to one of Accordingly, the highest credit symbols investment, which stimulates the leading CRAs, about 80% of rating Euler Hermes may assign EXPERT OPINION: economic growth, etc. global cross-border ows of debt to Ukrainian importer is ‘‘B’’. Long-term (over one year) Ukrainian National Rating Scale Obviously, assigning an capital are monitored through On the international scale this accurate, reliable, high-quality credit ratings. is signicantly below average. A borrower or an obligation with uaA rating is characterized credit rating to issuers and debt e world’s largest credit Another noteworthy fact is that a by a high creditworthiness compared to other Ukrainian instruments is a demanding rating agencies: Standard & Ukrainian importer with importer borrowers or obligations. The level of creditworthiness is uaA process which requires a Poor’s (USA), Moody’s Investors risk category below CC 2 suers susceptible to the impact of adverse commercial, financial signicant funds, knowledge Service (USA), and Fitch Ratings an inability to obtain insurance and economic conditions. and experience. erefore, this (USA) experienced a long period coverage for transactions. type of activity is performed of trial and error in the process of However, the specialists of Euler Ekaterina Pavlovskaya A borrower or an obligation with uaBBB rating is by professional credit rating evaluating the creditworthiness Hermes Deutschland AG clearly characterized by the sufficient creditworthiness comparing Senior specialist of IR Department, of companies before getting indicate that every solution they to other Ukrainian borrowers or obligations. The level Group of Companies Ovostar Union uaBBB of creditworthiness is affected by adverse commercial, their place in the market. come up with is individual and, of financial and economic conditions. Nevertheless, the criticism course, there may be exceptions. EXPERT OPINION: Financial condition evaluation against them is non-stop, for In order to increase at ‘‘uaK2’’ level distinguishes despite its versatility the credit transparency and eciency, Short-term (up to one year) Ukrainian National Rating Scale Group of Companies Ovostar rating does not always meet the CRAs pay much attention to Union as a company with high A borrower or an obligation is characterized by a high expectations of investors, nor are the methodology of credit creditworthiness and nancial creditworthiness compared to other Ukrainian borrowers CRAs fortune-tellers. rating, and a credit rating model stability. Of course, this is an or obligations. The borrower’s financial position is robust uaK2 Speaking about Ukraine’s plays a key role. Over the last important achievement which enough to prevent foreseeable risks in the short-term economy, it is natural that during century credit agencies and the period. conrms the reliability, credibility its development the services scientists they have attracted and transparency of our company of the national rating agencies have been searching for a perfect A borrower or an obligation is characterized by sufficient Sergiy Kasianov information, which is particularly became necessary, which in turn credit rating model which creditworthiness compared to other Ukrainian borrowers Ma valuable while dealing with in shareholder and Chairman stimulated the saturation of this would assure the most accurate or obligations. The borrower’s financial position is uaK3 investors and partners. of the Board of Directors, Group of segment with relevant companies results with minimal human satisfactory to prevent foreseeable risks in the short-term Rate assigning for our Companies KSG Agro S.A. providing professional services intervention. At the same time period. company is necessary process that on securities markets and the diversity of markets, states, will facilitate obtaining the most specializing in credit ratings. nancial reporting standards EXPERT OPINION: favourable nance conditions Rating is a measure of Among them: IBI-Rating, Rurik, and characteristics of business department, legal department with export credit agency creditworthiness for Ukrainian Expert-Rating, IBcontacts, information eliminates the and department of market involvement. e funds attracted companies as well as all Credit-Rating, Ukrainian Credit possibility of reducing credit analysis). It is also important will be used to implement our international companies. Rating Agency, Standard-Rating ratings to a mathematical to note that, despite the notable new investment program. We maintain the same pace and others. Each national rating formula. success in developing and of development that we began in agency has its own focus and In this regard, despite the applying this model, a credit 2011. e development process specialization. us, Credit- variety of existing rating models, committee has been established always needs money. e rst Rating, as the most experienced the local CRAs oen develop their in order to make a nal decision step we need to take is to obtain rating agency in Ukraine, own methodology for assessing regarding a target company’s direct nancing from abroad. Evgeniy Gamov cooperates with Bloomberg, the solvency of companies credit rating. is committee is will provide us with the R Managing Director, ALC ZhLeuters, and Cbonds and is and assigning a credit rating. consists of leading experts in the Group of Companies Ovostar minimum value of money and an authorized provider of us, IBcontacts justied this abovementioned departments, Union is one of Ukraine’s leading high technology, because we buy information for the National decision irrelevant of the results with special knowledge of agro industrial companies, and the equipment by means of a is credit rating aided ALC Securities and Stock Market obtained by using standard markets and companies. one of the TOP 3 Ukrainian egg tender among the world’s leading ZhL in attracting international Commission. methodologies and models. e Despite the fact that this producers. suppliers. e second stage - to nance and opened its access At the same time, IBcontacts obtain the consent of the bank to international capital market. is authorized by leading foreign for nancing. In fact, it gives us It demonstrates the stability export credit agencies (German with the methodology of Euler an opportunity to raise money of the enterprise and its long- Euler Hermes, Hungarian Hermes (which, in turn, is based A ‘‘7’’ is the highest risk, which is assigned without collateral. term systematic development. MEHIB, Korean K-sure, on recommendations of OECD to countries such as Mongolia, Iran, Chad, With the help of this credit Norwegian GIEK, etc.), as - Organisation for Economic and Ukraine rating we can present our well as funding organizations, Cooperation and Development) company in such countries as banks, investment funds and the procedure for decision Germany, Italy, the Netherlands, private investors to conduct making about the possibility Korea, and Baltic countries. creditworthiness research and and cost of providing credit truth is that use of tax planning methodology is based on the assign credit ratings to business insurance involves assigning a schemes by companies operating experience of Euler Hermes entities in Ukraine and the CIS particular category of risk to the in Ukraine and the CIS countries Deutschland AG, like any other countries. Cooperation with importer, the so-called ‘‘Buyer distort their ocial nancial methodology, it must not be Group of Companies KSG these organizations allows us to Risk Category’’. e classication statements. Accordingly, the seen as panacea for all cases Agro S.A. is a vertically integrated conclude that the credit rating is of these categories implies a credit rating model should and therefore requires constant company operating almost in actively used and becomes more ranking of customers according include a variety of quantitative renement. In turn, the careful all segments of the agricultural ZhL confectionary factory and more important in decision- to insolvency risk from CC 5 (the and, more importantly, application of these results will market, including production, is one of the top 5 leaders in making concerning insurance highest risk) to CC 0 (the lowest qualitative factors developed and help borrowers in Ukraine and storage, processing, and sale of the confectionery market of coverage for international trade risk, which corresponds to SOV tested by specialists in dierent CIS countries to attract foreign the agricultural products. Ukraine. transactions, the nancing of category – Sovereign Borrower). elds (employees of the credit funding. www.ibcontacts.com.ua / IBobserver / 8 BEST PRACTICES 5 Hermes is part of the insurance Germany remains one of chemicals, textiles, and vehicles group Allianz and is a subsidiary Ukraine’s most important trade from Ukraine. IBcontacts becomes of AGF France. Euler Hermes is partners. e country is the second IBcontacts and Euler Hermes represented in over 50 countries largest exporter and investor in Deutschland-AG are cooperating where 40 million companies the Ukrainian market. e main in developing trade relations operate. e export-credit agency areas of exports from Germany between Ukraine and Germany Export credit agency Euler a member of FEBIS provided insurance coverage are machinery, vehicles, chemical by providing credit investigation Hermes is the largest insurance for $702 billion. e mission products, electrotechnical of the local companies involved in corporation in Germany and the of Euler Hermes is to facilitate goods, and pharmaceuticals, as export nance deals. IBcontacts world. Euler Hermes insures the On July 1, 2012, IBcontacts who are involved in providing German exporters in business well as food and animal feed. company is the ocial provider risks of all German exporters became a member of the business information and debt development, protecting them Meanwhile, German companies of information for the German in the course of trading with international organization collection services at national from the risks of insolvent buyers. import metallurgical goods, ECA. customers worldwide. Euler FEBIS (Federation of Business and international levels. us, Information Service). Having the total number of employees of the organization’s member companies is more than 20,000 Overview of Buyer Risk Categories people, with an aggregate sales turnover of more than 2.5 billion carefully studied the documents Euro per year. e combined Buyer risk categories Country risk categories provided by the company, the workforce of FEBIS generates Board of FEBIS recognized over 180 million Business 1 2 3 4 5 6 7 that IBcontacts complies with Information and Consumer all requirements and has the reports annually for over SOV+ SOV+ SOV+ SOV+ SOV+ SOV+ SOV+ SOV+ right to enter into the union 500,000 European organizations, of credit information agencies, providing European business SOV/CC0 AAA to AA- A+ to A- BBB+ to BBB- BB+ to BB BB- B+ B among which there are only with invaluable support. 70 internationally recognized FEBIS (formerly known SOV- SOV- SOV- SOV- SOV- SOV- SOV- SOV- providers of credit information. as FECRO) was established in 1973, when the leading European information and CC1 AAA to AA- A+ to A- BBB+ to BBB- BB+ to BB BB- B+ B credit agencies joined forces to form the Federation of CC2 A+ to A- BBB+ to BBB- BB+ to BB BB- B+ B B- or worse Business Information Service, headquartered in Frankfurt. CC3 BBB+ to BBB- BB+ to BB BB- B+ B B- or worse − IBcontacts is also a member Henceforth, IBcontacts will carry of the American Chamber of CC4 BB+ to BB BB- B+ B B- or worse − − out its activities in accordance Commerce and the FCIB (Finance with the Charter and the Codes of and Professional Association conduct of FEBIS. of Credit and International CC5 BB- or worse B+ or worse B or worse B- or worse − − − FEBIS is an organization Business). consisting of 70 members, SOV+: Private-sector buyers/banks with an external rating better than SOV for the buyer’s country; SOV: Sovereign debtor: central bank or ministry of finance; SOV-: Other public-sector debtor; CC0 (best risk) - СС5 (worst risk): buyer risk categories for private-sector buyer/banks (corporate category). Members of Federation of Business Information Service AUSTRIA LATVIA CREDITREFORM COFACE LATVIA CREDIT WIRTSCHAFTSAUSKUFTEI MANAGEMENT KUBICKI KG SERVICES SIA LUXEMBOURG KREDITSCHUTZVERBAND CREDITREFORM VON 1870 LUXEMBOURG SA BELGIUM MALTA COFACE SERVICES BELGIUM CSB CREDIT MANAGEMENT LIMITED GRAYDON BELGIUM N.V. THE ATRADIUS INFORMATION UK NETHERLANDS CREDITSAFE BUSINESS SERVICES BV SOLUTIONS LTD GRAYDON COMPANY WATCH LIMITED NEDERLAND B.V. DUN & BRADSTREET IS NEDERLAND B.V. INTERNATIONAL NORWAY COFACE HOLDING AMERICA EQUIFAX LTD LATINA, S.A. DE C.V. EXPERIAN UK LINDORFF GROUP AB PERU GRAYDON U.K. LTD. CREDIT REPORT ® INTERNATIONAL COMPANY DEL RISCO REPORTS PROFILE (ICP) POLAND CREDITREFORM WOLFF WORLDWIDE LIMITED POLSKA Sp. z o.o. HUNGARY CREDIT CONTROLL Kft. COFACE POLAND CREDIT MANAGEMENT SERVICES Sp. z.oo COFACE HUNGARY CREDIT MANAGEMENT PORTUGAL SERVICES Kft. COFACE SERVIÇOS PORTUGAL, S.A GERMANY BÜRGEL WIRTSCHAFTS- SLOVAKIA INFORMATIONEN COFACE SLOVAKIA CREDIT GmbH & Co.KG MANAGEMENT SERVICES s.r.o. CREDITREFORM, VERBAND USA DER VEREINE E.V. CRISTAL CREDIT INTERNATIONAL HANSE DEBITOREN MANAGEMENT SVEN TEIKOKU DATABANK AMERICA, BUCKENBERGER & SASKIA Inc HAHN GbR TURKEY D.T.B. DIS TICARET BILGI SCHUFA HOLDING AG MERKEZI LTD. STI. GREECE HELLASTAT SA FINAR ENFORMASYON VE DANIÞMANLIK HIZMETLERI A.Þ ICAP GROUP S.A. UKRAINE IBCONTACTS Ltd. TRUST S.A. DENMARK EXPERIAN A/S (RKI/KOB) FINLAND SUOMEN ASIAKASTIETO OY KOEBMANDSTANDENS INKASSO SERVICE A/S FRANCE AC.REF EGYPT COFACE EGYPT COFACE SERVICES IRELAND EXPERIAN COFACE IRELAND LTD. CZECH CREDITREFORM s.r.o. REPUBLIC SPAIN AXESOR, CONOCER PARA DECIDIR SA. COFACE CZECH CREDIT MANAGEMENT SERVICES spol. s.r.o. IBERINFORM INTERNACIONAL, S.A. SWITZERLAND CREDITREFORM, SCHWEIZERISCHER VERBAND INFORMA, S.A. ITALY DELTAVISTA AG a CRIF CERVED GROUP S.p.A. COMPANY CREDITREFORM ITALIA srl INTRUM JUSTITIA AG CRIF S.p.A. ORELL FÜSSLI WIRTSCHAFTS- INFORMATIONEN AG EXPERIAN DATA SERVICES CANADA WORLDBOX BUSINESS CANADIAN CREDIT INTELLIGENCE REPORTING LIMITED SWEDEN CYPRUS EKO CHRISTODOULOS G. FÖRETAGSUPPLYSNINGAR AB VASSILIADES & CO LLC FAQTUM INTERNATIONAL AB ELEKORA GENERAL SERVICES UC AB MECOS INFOCREDIT LTD ESTONIA KREDIIDIINFO AS RIME INFORMATION BUREAU LIMITED 6 8 / IBobserver / www.ibcontacts.com.uaCREDIT InSURAnCE ECA in Ukraine: to be or not to be? Process of establishment of state export credit agency in Ukraine. ECA will be expensive. In light of the upcoming parliamentary elections and the respective budgetary expenditures, the state nancial institution is not likely to appear soon unless the Government nds additional Anna Dzhenkova resources. Head of communications department, IBcontacts ECA’s authorized capital must Over and over again Probably, every state be at least UAH 50 is concerned about the million development of international trade and promoting their own export activities. To address To provide a state control over these problems a special body the activities of the state nancial is being established in order to institution within its framework provide essential state support a Supervisory board for the state to national exporters. is support of export activities will body is called an ‘ be established. e Chair and ‘export credit agency’ members of the Supervisory ’ (ECA) and it provides a wide range of services, board will be approved by the including: credits for foreign Cabinet of Ministers. At the trade; government guarantees same time among the tasks for export credits; insurance of of the Supervisory Board is export credit and transactions approval of the selection criteria from political and other risks; and procedures for contracts and organizational information and business entities, risks and analytical support of export insurance and reinsurance and transactions. enforcement of the obligations In previous issues of undertaken by the state nancial IBobserver (see “State Support institution. o as “supplier credit” and “buyer f Exporters in Ukraine: Cui As to status quo: aer the Bill not more than 85% in case of only a resident bank may be the For the moment the main body Bono? credit”, as well as “commercial” ” in IBobserver # 6) we was considered by the President commercial one. lending bank. In this context, that oversees the establishment have a and “non-commercial” risks lready touched on the of Ukraine, it was forwarded to in fact not only the state bank and operation of state nancial in international trade. It also topic of a state export credit W the Verkhovna Rada for revision. hat is what? (Ukreximbank) may be the institutions in Ukraine is agency in Uk allows lending banks to grant raine U e latter didn’t render the Bill . But since the nlike the original version, creditor, but virtually any other the Cabinet of Ministers. An export credits insured by the topic has again become more on second reading, rejecting it the Bill considered by the resident bank (e.g. commercial) interesting practical detail of the state ECA as well as respective than relevant, we have decided to V on the basis of recommendations erkhovna Rada on May 17, ready to oer a credit. At the Ukrainian ECA establishment foreign contracts. Under the return to it and analyze the latest provided by the President. us, 2012, has undergone signicant initial stage of development of is the fact that its authorized deve Bill, the infrastructure necessary lopments. to be continued…changes. the Bill, it was assumed that a list capital must be at least UAH First of all, the Bill is only a of eligible creditor banks would 50 million. So, the Ukrainian basis for the export credit system be prepared by the Cabinet of of Ukraine. To complete the Ministers of Ukraine. In the Insurance payments of work it is necessary to adopt a current edition of the Bill there is state ECA should not exceed 90% range of regulations, including no such condition. It is peculiar those of the Cabinet of Ministers that the role of Ukreximbank is of the foreign contract in case of of Ukraine. not specied in the Bill. We can non-commercial risk In addition, the future assume that in the future the operation of export credit in Government or the National Ukraine depends on funds Bank of Ukraine will prepare a Such a long way for implementing state nancial availability in the state treasury. separate resolution explaining Let support for export activities had ’s go back a year ago to It is also important that the role of Ukreximbank in to be developed. It means the review the whole long process. the current version of the Bill export credit schemes. Also, one Dur establishment of the state ECA ing 2011, the Government of does not dene such concepts can not exclude the potential Uk and the denition of creditor raine developed and submitted as ‘‘lending bank’’, which may reorganization of Ukreximbank, banks that will provide export to the Verkhovna Rada bill  be involved in any transaction, combining the functions of a 9373 a credits. Insurance payments of s of 31.10.2011 “On the even though this concept is state nancial institution and a state nancia state ECA should not exceed l support for export mentioned in the Bill several state lending bank, but for the ac 90% of the foreign contract in tivities” (hereinaer, the Bill). times. Meanwhile, it may be moment there is no evidence of e B case of non-commercial risk and ill dened concepts such concluded from the text that these assumptions. EXPERT OPINION: Russian Experience to be an ecient tool to established in October 2011 as point? Neighbouring Russia has support national exports. ese an open joint-stock company – EXIAR has little practical demonstrated more wit in state institutions currently exist in with a registered capital of 30 experience (several insured ECA establishment. e Russian more than 70 countries. In billion RUB. Vnesheconombank projects), but the agency has Agency for Insurance of Export Russia the establishment of is the sole shareholder of EXIAR. passed the phase of normative- Credit and Investment (EXIAR) the national ECA was under e main activities of the legal base establishment. is discussion for many years, but agency are support of high-tech is an experience we certainly only in 2007 Vnesheconombank Russian export through credit are willing to share with our (the function of export credit and political risk insurance for Ukrainian colleagues. e insurance had been assigned export credits and insurance elaboration of legislation for to Vnesheconombank when of foreign Russian investments agency functioning was one the Development Bank was against political risks. of our major challenges. e established in 2007) together with e agency aims to create law that governs our activities the relevant ministries (Ministry conditions for promoting Russian captures the scope and was established in 2011 and now of Economic Development, products on international underlying principles of our operates successfully. Ukraine, in Ministry of Industry and Trade markets, to minimize the risk work. is enables us to take into turn, has a unique opportunity and Ministry of Finance of of nancial losses during export account international experience to take advantage of Russian Russian Federation) started operations and to improve the and Russian peculiarities experience. Petr Fradkov, EXIAR working to establish such an conditions of export nance while draing documents of CEO, shared his experience with agency in order to organize these from banks. succeeding levels (internal IBobserver. functions in a separate structure. regulatory framework of It took a lot of time to prepare – Have you consulted with agencies, products, etc.) in order for changes in legislation. e any of the world’s largest to develop the most ecient legal framework to govern the ECAs? Which one? Has such economic model for this type of activities of agency was set up cooperation been helpful? activity. (Federal Law as of 18.07.2011,  – We have used and adopted e administrative body of 236-F ‘‘On Amending of Certain the best practices of foreign the agency is crucial. e Board Legislative Acts of Russian export credit agencies. In of Directors of EXIAR includes Petr Fradkov Federation in order to improve particular, we have had close key ministers of the Russian Director General, the mechanism of export credit cooperation with the Italian government, headed by Igor Russian Agency for Export Credit and insurance and investment from national credit agency SACE, Shuvalov, First Deputy Prime Investment Insurance (EXIAR) business and political risks’’; German ECA Euler Hermes, Minister. Government Resolution as of and with other partners as well. We welcome the initiative 22.11 .2011  964 ‘‘Rules for the Our goal was to examine existing of establishing national export – What was the basis for the implementation of export credit models of ECAs and to create our credit agencies in Ukraine. We ECA establishment in Russia? and investment insurance from own taking into account Russia’s believe that it will contribute to How long was the road from business and political risks’’). specics. development of non-resource preparation to approval of the e Russian Agency for facilities trade between our law on EXIAR? Insurance of Export Credit – What would you recommend countries. – Export credit agencies and Investment (EXIAR) was for Ukraine concerning this emerged in 1990s and appeared www.ibcontacts.com.ua / IBobserver / 8 7 MARkETS AnD TREnDS Trends in Development of Revival of Pig Breeding Agricultural Insurance in Ukraine Sector in Ukraine insurance company willing to for Regulation of Financial insure them. Services Markets of Ukraine and One of measures taken by are members of the Agricultural 100,000 heads per year. ere the state to support agricultural Insurance Pool, funded by its by 70% were four such complexes in producers was the adoption of own members. the USSR; they were symbols of Act  4391-VI of February 9, e right to insure agricultural advanced equipment for Sov animals keeping and its iet megalomania and were 2012 “On the singularities of products may be granted application built as a national project for the agricultural insurance with state only to producers that meet Tetiana Stazilova nancial benet of the Central support” (hereinaer, the Act requirements to be developed Olena Gnezdilova Legal Advisor, IBcontacts Committee of the CPSU and by 15%  4391-VI). is law came into by the Cabinet of Ministers of Head of Market Research under its supervision. Now, the force on July 1, 2012. Ukraine. Act  4391-VI provides Department, IBcontacts p genetically incorporated roject aims for not just a total is act revives subsidized that only residents may count on modern biological features of revival of its former scale with Ag insurance, provided through state support for insuring their riculture is one of the animals full restoration of infrastructure sectors of economy which In the previous issue of our – it will also increase its volume strongly depends on external by 15% newspaper (IBobserver  7, by 240,000 heads per year. factors not inuenced by human Act “on the singularities of agricultural “Prospects of the pig breeding According to the Ukrainian activity. Such factors as weather, professional training of staff insurance with state support” was adopted with sector in Ukraine”), we highlighted Agrarian Confederation, the and management at an natural disasters, weeds and pests enterprise the issue of pig breeding in active development of pig can cause considerable damage to a view to providing state support for agricultural Ukraine and mentioned the breeding in Ukraine will slow the harvest. As a result, producers producers Danish pig breeding miracle. down considerably in 2012. e e availability of a high- may incur substantial losses. e We have decided to continue main reasons are rising prices grade manufacturing base only way to protect an agricultural our investigation of this topic, for formula feed and a reduced with a complete engineering producer against losses caused by because Ukraine has something growth rate in purchase prices for infrastructure, availability of allocation of state funds in the products. Non-residents are force majeure is the insurance of to brag about. pigs. But it will aect businesses personnel resources, availability p form of grants to cover part of deprived of this right.roperty interests. e pig breeding sector in aimed only at raising pigs. of food resources generate  the insurance payment. But to Concerning the insurance e development of Ukraine is experiencing a period Companies within the preconditions for successful ag say that starting from July 1 the contract itself, in accordance with ricultural insurance in Ukraine of new industrialization aer a industry rarely export products, reconstruction of the complex scheme will work in full force and Act  4391-VI the contract also is not high enough for the long decline. A variety of state limiting their development - KSG Agro S.A. experts believe mom eect would be presumptuous, as needs to be draed pursuant to ent. is proceeds from a programs have also played an within the domestic market only. - only aer having analyzed, that numb the funding mechanism must be certain requirements. e subject er of reasons. Perhaps the important role in enhancing However, its capacity is sucient we can build a completely closed mos specied in regulations that have of the contract are the property t signicant is the lack of industry attractiveness for for further development of cycle, we have begun to work on nan not yet been adopted. interests of the insurer concerning cial resources a company investors. e decisions of the domestic pig breeding. e next innovation of Act its risks relative to grown, fed, could invest to insure its products. Cabinet of Ministers of Ukraine According to the Food and  4391-VI is the development assembled, and manufactured In settling this problem the state on investment compensation Agriculture Organization p of standard insurance products. agricultural products which lays an important role, being a for agricultural sector have (FAO), in 2009 526.5 k us, the state is trying to have not been recycled. Also, ind of “helping hand” for a been in force for several years. thousand tons of pork p facilitate the administration of the law stipulates that company erson wishing to insure us, in 2010-2011, eight main slaughter weight have the insurance market that will may expect a payout if the risks, as well as for the beneciaries were paid UAH been produced in respond more eectively insured event is clearly dened 368.4 million to defray costs for Ukraine, another to the specic in the insurance contract. e construction and reconstruction 240 tons were situation procedure for the calculation of pig farms. imported, and that of insurance payments is also contained in the Act. Such a standardized The pig breeding approach to contracting will sector in Ukraine simplify the procedure is experiencing for obtaining a period of new agricultural insurance, which, on the one hand, will limit industrialization the eld of independent activity for the insurance companies, Large agricultural holdings but on the other will facilitate that have sucient resources the very process of agricultural for constructing large livestock insurance and reimbursement. farms remain “pioneers” In conclusion, it should be in this area. Newly built or noted that adoption of the Act reconstructed (in Ukraine, these is a clearly positive measure ideas are nearly synonymous) pig to support agricultural breeding complexes deepen the producers. But the Act vertical integration of investor’s will not be ecient businesses, increasing their until regulations eciency. are adopted that Agricultural holding KSG will dene a Agro S.A. may be the prime consumption practical example. Holding director and in 2010 was less than 18 kg of pork. e average consumption of pork in EU countries is 40 kg per person per year and for some countries the volume is even bigger, for example, founder Sergiy Kasianov took in 2010, according to an interest in agriculture in Eurostat: 2001, and at that time bought project. Consumption of pork his rst agricultural enterprise. To implement the complex 81 kg in Denmark Development followed, and with reconstruction program, all production volume increasing in the specialized divisions of the Consumption of pork 76 kg The average 2011 was successfully crowned in Spain holding engaged in producing by an IPO. is was a new and processing of agricultural consumption of Consumption of pork stage that gave more power and products are involved. 56 kg pork in EU countries in Germany opportunities to develop the e project implementation is kg per person ‘‘eld-counter’’ concept and period ranges from 20 to 24 40 Consumption of pork 45 kg in Hungary establish a vertically integrated calendar months, with an per year holding that owns land as well investment volume from UAH as the means for processing Industry development trends 280 to 350 mln. e number of agricultural products. both worldwide and in Ukraine productive sows ranges from is cooperation with equipment “It’s no secret that pig have the same nature. e 7300 to 8400 heads. supplier:
Posted: 23 August 2012

See more from Business Administration in Ukraine

Expert Views    
Representative office vs. LLC in Ukraine   By Marketplace UkrRos LLC
Open representative office in Ukraine   By Marketplace UkrRos LLC
Can Lviv attract Shared Service Centres?   By A&T Consulting
IBobserver newspaper #4   By IBcontacts
Latest News    
IBobserver newspaper   By IBcontacts