Call for expression of interest - Food and Agricultural Company

CALL FOR EXPRESSION OF INTEREST

Introducing Inđija
At the beginning of 2008 the world-renowned Financial Times magazine rated Inđija 18thamong the top 25 European destinations for foreign investments. Since then, the district of Inđija has been continually developing its infrastructural facilities to ensure that potential investors will encounter the most favorable conditions for growth and success of their investment. The city of Inđija is located in Serbia’s leading agricultural region. It is well connected by road to both Central Europe, lying to its north (via Hungary), and to the Mediterranean basin and the Middle East, which lie to the south (via Bulgaria/Macedonia and Greece). Moreover, it is conveniently situated at a distance of about 35km from both Belgrade and Novi Sad, two major Serbian cities. The European highway E57 passes Inđija at a couple of miles from the city center, and Belgrade’s international airport “Nikola Tesla” is just a 30 kilometers drive away. The close proximity of two river ports on the Danube, port Novi Sad and port Belgrade/Pančevo, and the construction of a high-speed railway line between Belgrade and Budapest – to be incorporated into a larger corridor connecting Budapest and Thessaloniki through the One Belt One Road initiative –should only serve to consolidate the picture of the city’s ideal location.

Introducing the company
Since its inception in 1956, the company has been primarily engaged in the production of grain mill products. Throughout the years, however, the company has considerably expanded its business to now include bakery and wafer production lines, the service of storing and drying grains, fodder manufacturing, as well as wholesale and retail. In this delicate economic sector, the company is one of the few companies to have overcome the challenges of ownership transformation and political instabilities/adversities and to operate profitably for over 60 years.
The management of the company, with their years of experience and excellent knowledge of circumstances in the primary agricultural sector, has made it possible to attain the high-ranking position it now holds in its field of business and to achieve remarkable business results in production, wholesale and services.
The Company currently employs 85 persons on a permanent basis, most of whom are also the company’s shareholders. Initially, during the privatization process which was completed in 2002, the company’s whole capital was split up into 70.677 ordinary shares, which were acquired by its employees (acting as private individuals) who thus became full owners of the company. At a later stage, a concentration of ownership took place, so that currently a control package of shares (ca. 61,75%) is owned by a smaller number of shareholders, mostly members of the company’s management, by means of a special-purpose entity (SPV). The Company’s shares are listed on the Belgrade Stock Exchange. Information on the structure of the share capital, number of shareholders, trade and prices, financial indicators and other market-related facts can be found at the webpage of the Belgrade Stock Exchange (www.belex.rs -tiker ZISR).

Facilities and potential
The Company’s headquarters are situated in the industrial zone of the city of Inđija and occupy around 4 hectares of company-owned land. Its main building, a silo with a capacity of 40.000 tons (see picture). Company owns direct connection (industrial railroad) to the main railway route Belgrade-Budapest, an integral part of the prospective high-speed railway line between the port of Thessaloniki, Greece and Hungary’s capital in Central Europe. The European highway E57 is at 4 kilometers, the port of Novi Sad (river Danube) at 35 kilometers from the Company’s seat.
The region in which the Company is operating is known for its extremely well-developed production of basic grains (wheat, maize, sunflower etc.) and also traditionaly for a growing primary fruit production (apples, grapes, peaches, apricots, plums, etc.), mostly intended for export. Excellent equipment of the Company’s facilities, an extensive sales network, careful quality controls and possession of quality certificates (HACCP, ISO 22000, FSSC), an experienced management, and certainty of business – all this has enabled the company to enter the select circle of companies chosen to be business partners of the Food Buffer Stock Company of the Republic of Serbia, and this partnership has now lasted for years.

Property and locations
For the purposes of its business activities the Company currently holds ownership of the following property:
 A silo with concrete cells, with a capacity of 40.000 tons (Inđija)
 A mill, with a capacity of 120 tons per day (Inđija)
 A fodder factory, with a capacity of 20 tons per day (Ljukovo, 5km from Inđija)
 A fully equipped lab for performing quality controls (Inđija)
 A bakery production line, with a capacity of 20.000 loafs per day (Inđija)
 Production lines for making puff and frozen pastry (including cooling chambers), phyllo dough for pies and baklavas, wafers, fatty cakesand semi-finished bakery productsfor retail (Inđija)
 Appropriate warehouse facilities for storing all of the above listed products
 A vehicle fleet and two cistern trailers for transporting fuel.

In addition to the above, the Company owns several fully equipped stations for the acquisition of primary agricultural products (wheat, maize etc.), in specific:
 A silo with a capacity of 7250 tons in Novi Karlovci
 Silo cells with a capacity of 250 tons in Novi Slankamen
 Silo cells with a capacity of 200 tons in Krčedin
 Silo cells with a capacity of 200 tons in Surduk
 A semi-mechanized ground storage facility with a capacity of 500 tons (within the fodder factory in Ljukovo) Silo New Karlovci Fodder factory Ljukovo

Moreover, the Company also owns premises or buildings at the following locations:
 Belgrade (29 square meters)
 Novi Sad (31 square meters)
 Niš (194 square meters)
 Inđija (40 square meters within the company and 16 in the city center)
 Novi Karlovci (20,3 square meters)
 Martinci (38 square meters)
 Krušedol (490 square meters).

All above listed premises are leased out or intended for rent. A particular asset of the company in terms of value are the 584 hectares of land it owns, of which:
 572 hectares are arable agricultural land – 217ha in the district of Inđija, 202ha in the district of Irig, and 153ha in the district of Pećinci, all within 50 kilometers from Inđija town
 12 hectares are building land– 9ha u Inđija and 3ha in StaraPazova.
Most of this land – 361 hectares in total – consists of 6 large plots, with 78.5; 75; 73; 51; 43,3; and 41 hectares in size. Another 66.6 hectares comprise 3 middle-sized plots, the sizes of which are 25.7; 23.5 and 17.4 hectares. The remaining land (around 114 hectares) is made up of small plots, the sizes of which vary between 1 and 10 hectares. In the current production year, 561.65 hectares of land have been leased out, based on which a supply of 1,501.5 tons of high-quality wheat in favor of the Company has been stipulated.

Business and financial indicators

The Company has three main streams of incomes: the sale of company-manufactured products; providing services of storage; and trading on the national and international market. Structure of income by business activities

Revenues (last 5 years)
In accord with the agricultural production cycle, the Company partly covers its demands for working capital through revolving and/or one-off bank loans. Nevertheless, the Company has always been able to meet its financial obligations, based on its stored supplies of easily marketed goods, so that company liquidity has never been an issue.
The Company’s main business bank is Raiffeisen banka a.d., Belgrade, but it maintains business relationships with several other banks (e.g., Vojvođanska and Intesa), too.
The Company also has well-developed commercial relationships with a considerable number of trading companies through which it markets its end products. The list of the Company’s most renowned and important partners includes such large commercial chains as Univerexport, Roda, Mercator, and Vero. Overall, the Company maintains business relations with large number of entities. The Company has consistently operated with realized profits, which were primarily used to upgrade the material resources for business, by investing in equipment and buying land. Almost all of the agricultural land is leased out, with leaseholders paying in natura, by supplying the amount of grain contracted. For the purpose of ensuring the Company’s further business success and growth, its management, with agreement of almost all shareholders, has decided to announce to the investing public their intent to put on sale 100% of the capital of the company.

This brief information sheet on the Company should serve as a call for potential buyers-investors to initiate negotiations on the conditions of acquiring of the Company. Potential buyers who find themselves interested are invited to communicate their willingness to initiate negotiations, in written form, using the postal or email address given below.