PLARUS RECYCLING PLANT LLC BUSINESS CASE

The plant is located in the industrial area Rekintso Solnechnogorsk, Moscow Region. Area sq.m. Production area: Workshop sq.m. Workshop sq.m. Workshop sq.m. Warehouses sq.m. TOTAL sq.m. Equipment: Equipment used at the plant is designed and produced by the largest European manufacturers from Germany and Italy. Processing volume: 1,500 tons of used PET bottles per month. Number of employees: 200. Turnover: 50 million rubles per month * Forecasted profit: 4.5 million rubles per month * Brief description of the process: The first workshop sorts incoming raw materials: used PET bottles are sorted out into four colors (clear, blue, green, brown); In the second workshop carries out washing and crushing assorted bottles into flakes; Extrusion of the flakes into amorphous PET pellets and solid state polymerization of them (SSP stage) are fulfilled in the third workshop Resources base: used PET bottles. Finished products: granular PET grade "ClearPET" *Data are based on a 75 % plant utilization rate 1. Information about the plant.

Production characteristics: To date, the company has reached a stable productivity 1250 kg /h SSP, which means processing up to 1,500 tons of post-consumed PET bottles per month (about 40 million bottles) and producing up to 800 tons of PET granulate and 200 tons of PET flakes per month. Main Economic Indexes: The company's turnover from February to August 2012 is 280,000,000 rubles. The estimated profit from February 2012 to the end of the year will be 45,000,000 rubles. 2. The current status of the plant.

The problems which faces the plant: I. Shortage and poor quality of incoming raw materials (PET bottles). Due to the lack of the system of used PET bottles collection in Moscow region and in Moscow, the company has to buy raw materials from most of the Russian Federation area starting from the Siberian Federal District incurring additional transportation costs. Poor quality of incoming raw materials is due to the lack of separated collection system. Incoming PET bottles are badly soiled and it reduces the efficiency of processing. II. The lack of technical regulations for PET containers production. In Europe and the United States manufacturers of PET bottles use highly soluble glue and paper labels, which are easily washed off during processing. In Russian Federation such regulation currently does not exist, which leads to additional costs and difficulties in recycling process. III. Technological issue - the company needs additional investments to increase production, to improve product quality and to rise the overall efficiency of the plant. IV. The high cost of credit resources, the necessity to refinance short-term investment loans to long-term ones. V. The high cost and lack of access to energy resources.

For further business development of PET recycling the following ways are possible: Attracting investors for changing the structure of the loan portfolio and the additional financing of the plant technological equipment. Organization of public-private partnership with a prospect of scaling the experience for the entire territory of Russian Federation and the Customs Union. Solving the problems of promoting environmentally oriented production at the legislative level. Creating the cluster within Russian Federation on the basis of the plant "PLARUS" experience that will collect, recycle and market finished products and will allow to increase profitability The sale to the final consumer not PET raw materials but finished products, such as PET sheet, will increase the value added. 3. Business Opportunities

"PLARUS" Plant is the first and only one that carries out full recycling of PET containers in the CIS. As a consequence, there is no competitive environment in the presence of a stable demand for recycling raw materials. "PLARUS" Plant gained unique experience in the recycling PET containers of Russian quality that allows to scale the business in Russian Federation and the CIS, avoiding technical and economic errors. Investing extra about 7 million euro, in addition to already invested sum of 30 million can create a synergistic effect expressed in increasing the productivity up to 1.5 times, and in increasing profits by 3 times. 4. Why is co-operation with the "PLARUS" plant profitable?

In connection with the worldwide trend to support and develop programs to reduce the burden on the environment and reduce the consumption of non-renewable resources, the project of the development of such business can be widely supported by the public authorities and the multinational corporations: Currently under the consideration is a new law project № «Amendments to the Federal Law "About Production and Consumption Waste" and other legislative acts of Russian Federation." The purpose of this law project is to create economic incentives to engage waste as secondary material resources into economic circulation. The law proposes to oblige the manufacturer (importer) of the products provide utilization, disposal, and (or) burial of produced (imported) products because of the loss their consumer properties. The entry of this law into force will allow to strengthen the resource base, to provide the demand for products, which will increase the liquidity of the "Plarus" business

Full separate collection of all packaging waste (paper, cardboard, glass, aluminum and tin, plastics, and composites) currently arranged only in Germany and Austria. In other European countries exists only the separated collection of individual fractions of packaging waste. Responsibility for the separate collection of packaging waste is on: local authorities (in the UK, Denmark, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, France, Finland); private companies or municipal enterprises (in Austria and Germany); NGOs (in Belgium) in Sweden operates a system of collection points. Financing of the collection, sorting and recycling of packaging waste in almost all European countries is fulfilled by authorized non-profit organizations that have entered into agreements with industrial producers and consumers of packaging, local authorities and organizations specializing in the waste collection and recycling. 5. Foreign experience

Yours respectfully, CEO “Plastic Recycling Plant “PLARUS” Alexander Filipishin