Construction of plant for production of farm machinery and aggregates Astana, 2017

Project idea The productive capacity of the enterprise is estimated at the level of 500 tractors and aggregates per year at the initial stage and up to 3,000 units when reaching the maximum project capacity. Construction of premises of the tractor plant with the installation of necessary equipment for «Complete Knock Down» assembly in order to organize the production of agricultural machinery and aggregates in the Akmola region, near Astana. Equipment and component supplier – polish company «FARMER».

Background of the project creation Kazakhstan annually sows about 16 million hectares of planted area. More than 150 000 tractors, 90,000 of seeders, 340,000 units of groundcare machines and 44,000 harvester-threshers are annually participating in the field and agricultural work. Equipping of the agricultural production in the Republic of Kazakhstan with machinery is characterized by negative dynamics. About 93% of the park are tractors with a useful life of more than 10 years. The share of imports of foreign agricultural machinery is 90%, 10% is covered by the production of Kazakhstan machinery. The Republic of Kazakhstan needs more than 5 thousand items of wheeled-cultivating tractors per year.

Project advantages Strategic goals Reliable partner – polish company «FARMER», which has more than 120-year history; Qualified personnel; High quality of products; Wide assortment; High demand for production. In terms of the second stage of the project implementation, it’s planned to open a service center for machinery maintenance. It’s planned to open such centers in the all regions of Kazakhstan.

Production Front loader and manipulators Tractors Herbage processing line Fertilization machinery Tractor trailer Municipal machinery

Production Technological line for briquetting straw - LTBS Machinery for chemical treatment of plants

Project implementation schedule Arrangements/Month 2017 2018 II qua. III qua. IV qua. I qua. Business-plan elaboration   Solving the problem of financing Acquisition of land Construction designing Construction of processing department Advance payment for equipment, delivery, installation Territory fencing and accomplishment Purchase of components Recruitment of staff Start of production The start of production is planned for the second quarter of 2018.

Market review Total sown area of agricultural crops in the RK, thousand hectares, excluding fallows Area of agricultural land in Kazakhstan, million hectares Source:/Agency for Statistics of the Republic of Kazakhstan

Market review Structure of tractor parks in the Republic of Kazakhstan based on service life,% Number of manufactured tractors, units Source:/Agency for Statistics of the Republic of Kazakhstan

Imports review The share of Russia, Belarus and China in imports of Tractor imports dynamics to Kazakhstan, un. Attached equipment imports dynamics to Kazakhstan, un. The share of Russia, Belarus and China in imports of agricultural machinery in the Republic of Kazakhstan is 64%.

Project management structure Project partner – polish company «FARMER»: - Equipment supply; - Component supply. Financing organization: - Polish people’s bank; - Lending. Project initiator - ТОО «EQS. European Quality Service KZ»: - Marketing; - Organization of plant construction; - Organization of the production process; - Production control; - Logistics. Product consumers: - Agricultural enterprises ; - Peasant agriculture; - Utility organizations; - Construction firms.

Project cost Total cost of project - 140 mln. USD. Necessary funds Sum Share mln. $ Capital investment 98 70% Incl. Land parcel 3 2% Processing department 15 11% Equipment, Repair centers in 16 regions 70 50% Other (accomplishment, fencing) 10 7% Working capital 42 30% Incl. Work stock, material (components + delivery) 32 Leasing company Total 140 100% Total cost of project - 140 mln. USD. Project financing is planned to be carried out at the expense of own funds and borrowed capital. Loan profile Un. of. measure. Value Interest rate % 5% Loan period years 10,0 Grace period for payment of interests mon. 12 Grace period for payment of principal debt

Socio-economic importance of the project   From the economic point of view the project will contribute to the : organization of new tractor production in the Akmola region; further development and strengthening of domestic industrial production; import substitution; increase in the gross regional product of the Akmola region; receipt of taxes and other deductions into the Akmola region budget. Among social impacts it’s necessary to mark : satisfaction of organizations' demand for quality products (tractors, attached equipment, front loaders, etc.); creation of 58 new workplaces, that will allow employees to receive a stable income.

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