As of the end of 2014, Razgulyai Group improved some performance results despite the economic difficulties
In 2014 Razguliay Group worked in most difficult conditions related to the overall economic situation in the country, lack of working capital financing and the period of waiting for Vnesheconombank, the principal creditor, to take a decision on the debt restructuring program for over three years. The most serious negative consequence of these factors was that the Group was forced to take a decision on suspending operations of three of the 10 sugar refineries and one rice factory as well as reducing the arable land area.
However, due to the efforts made, the Group managed not only to keep the key performance figures at the level of 2013 but also to raise the performance effectiveness improving financial results.
The total profit from sales, one of the key financial results of the Holding, grew in 2014 by 59% compared to 2013 and amounted to RUR 3 979 billion *, and the return on sales amounted to 27%, which is 1.6 times more than this figure.
Despite reducing the arable land area, winter wheat sales amounted to 218 thous. tonnes, which is almost the same as in 2013 (228.8 thous. tonnes), while barley sales grew by 27% compared to 2013 and amounted to 112.2 thous. tonnes.
The Group was able to maintain a leading position in the sugar refining segment. Production of sugar by enterprises of the Group in 2014 totaled 317 thous. tonnes, which is only 3% less than in 2013, while sugar recovery during the year increased from 13% to 14.8% and sugar loss in production decreased from 2.7% down to 2.6%, which is one of the lowest figures among the leading sugar producers in Russia. Sugar sales in 2014 remained at the level of 2013 and amounted to 302 thous. tonnes.
Rice production in 2014 decreased down to 62 thous. tonnes due to forced shutdown of one of the enterprises, while in 2013 this figure was 99.6 thous. tonnes.
At the end of March, 2015, Razgulyai Group launched the spring sowing campaign. This year it is planned to allocate over 252 thous. hectares of arable land for crops. The area allocated for winter wheat and spring wheat this season increased from 52 thous. hectares up to 75 thous. hectares; the area for sugar beet and rice remained the same as last year: over 50 thous. hectares for sugar beet and about 14 thous. hectares for rice. 31 thous. hectares will be allocated for oil-producing crop, 28 thous. hectares for barley and about 10 thous. hectares will be used for corn for grain. In addition, the fields of the agricultural holding will be sown with oats, sinapis, white lupin, corn for silage, as well as various species of annual and perennial grasses. Currently, approximately 70% of the spring sowing campaign was completed, over 100 thous. hectares was sown.
On May 7, 2015, Vnesheconombank notified the Group of the positive decision on setting a credit limit for enterprises of Razguliay Group to finance the 2015 sowing campaign and preparation of processing enterprises of Razguliay Group for the 2015 processing season. However, taking into account the conditions specified based on the limit, under which the loan proceeds are disbursed, the Group will be able to use the loan proceeds not earlier than in 2.5 months, when the sowing campaign is completed. Thus, the funds can only be used for partial financing of preparation of processing enterprises of Razguliay Group for the 2015 processing season.
“Conducting the sowing campaign under the liquidity shortage conditions makes us buy the cheapest seeds of grain crop, sugar beet, soybeans and corn, as well as refrain from using imported high performance crop protection chemicals and minimize the amount of fertilizers added, which, in turn, can adversely affect the crop yield of the Group this year,” said Elena Lazarenko, General Director.
Razgulyai Group launched the sowing campaign
At the end of March 2015, Razgulyai Group launched the sowing campaign. This year it is planned to allocate over 252 thous. hectares of arable land for crops, which is the same as the sowing area last year. The area allocated for winter wheat and spring wheat this season increased from 52 thous. hectares up to 75 thous. hectares; the area for sugar beet and rice remained the same as last year: over 50 thous. hectares for sugar beet and about 14 thous. hectares for rice. 31 thous. hectares will be allocated for oil-producing crops (about 25 thous. hectares for soya and over 6 thous. hectares for sunflower), 28 thous. hectares will be allocated for barley, some part of which, malting quality barley, is cultivated by special orders. About 10 thous. hectares will be sown with corn for grain. In addition, the fields of the agricultural holding will be sown with oats, sinapis, white lupin, corn for silage, as well as various species of annual and perennial grasses.
Based on the current weather forecasts, the sowing campaign is conducted within the time frame typical for the regions, namely end of March in the south, beginning of April in the Belgorod Region, middle of April in the Central Black Earth Region and end of April in the Republic of Bashkortostan.
By the beginning of the sowing campaign, the needs of agricultural enterprises of the Group in seeds of agricultural crops, nitrogen and complex mineral fertilizers and spare parts for agricultural machinery were fully satisfied. Machinery fleet of the enterprises is being upgraded.
“Conducting the sowing campaign in due time, at a good technological level and according to high quality standards creates the basis for producing a high yield and further sustainable development of the company. Realizing its importance, the Group allocated all the available funds for the spring sowing campaign,” said Elena Lazarenko, General Director of Razgulyai Group.
Razgulyai Group was included in the updated list of strategic companies
On February 8, the Ministry of Economic Development of the Russian Federation issued an updated list of strategic Russian companies approved by the Government Commission for Economic Development and Integration.
The Government intends to support the companies included in the list with a view to mitigating negative consequences of the possible crisis.
The list contains 199 organizations including holdings and vertically integrated companies, whose profit accounts for over 70% of the aggregate national income and the number of employees is more than 20% of the total number of persons employed in the economy. The list of companies includes 22 representatives of the agricultural sector including Razgulyai Group. As it is explained by the Ministry in the preamble, in preparation of the List there were taken into account such factors as annual revenue, tax payments to the budgets of all levels, number of employees as well as significant market share and impact on social and economic stability in constituent entities of the Russian Federation.
State guarantees may be provided for the selected enterprises on a priority basis. The guarantees will be given for implementation of investment projects, including funding for debt restructuring purposes.
Razgulyai Group was already included in a similar list in the crisis year of 2008 and inclusion of the Group in the updated list, in our opinion, shows that the government takes necessary measures to protect national agricultural producers from adverse effects of the current economic situation. In this regard, we hope that a positive decision on the program of the Holding credit portfolio restructuring will be taken, which will reduce the debt load of the Group, credits servicing cost and ensure further orderly development of the Company,” said Elena Lazarenko, General Director of Razgulyai Group.