Agria Group Holding JSC is just one step away from BSE debut. At the beginning of October the company filed IPO prospectus with the Financial Supervision Commission. Profit.bg to Emil Raykov, CEO and chairman of the Board of Directors, about the future of the holding and about the the activities of its subsidiaries.

Q. Mr. Raykov can you tell us more about Agria Group Holding and which companies are part of its structure?

Agria Group Holding is a holding company, which unites the activities and results and of its subsidiaries. The management controls a structure that is operating aggressively in the area of agricultural business. The strategic aim is to create well-working enterprises in the grain – flour – bread production cycle.

Some subsidiaries (Kristera Agro and Agro EOOD) operate in the filed of agribusiness, that is land cultivation, grain cultivation (wheat, corn, sunflower, oil-bearing cole-seed), as well as services in the area of agricultural technology.

We are cultivating 55,000 decares of land, and our aim is to have 85,000 decares by 2012, of which we will own 15-20,000 decares.

Another area, in which our subsidiaries work (Kristera JSC and Corn-K JSC) is processing industry. We have a mill-factory in Popovo with a capacity of 35,000 tonnes per year, and an adjacent storage facility with a capacity of 60,000 tonnes, which is also the biggest grain storage facility operating in compliance with the Law on trade and storage of grain.

Our third area of activity is production of bread and other bakery products in our bread-making plants under the Corn Label in Varna, Gorna Oriahovitsa and Shumen. The market share of our bread plants in north-east Bulgaria is around 25%.

In the past two-three years we have been examining the possibility of implementing a project in the area of renewable energy sources. The construction of a biofuel plant is an important part of our investment strategy.

Q. What are the holding's financial results and what are your future prognoses?

In 2006, consolidated net sales revenues stood at 47.4 mln leva (24.235 mln euros), and we are projecting the figures to grow 100% to 98.6 mln leva (50.413 mln euros) by 2012. Consolidated 2006 profit came to 617,000 leva (315,467 mln euros), and for H1 2007 it is 900,000 leva (460,162 euros). We expect this year's profit to amount to 1.758 mln leva (898,851 euros). By 2012 we expect profit to reach to nearly 10 mln leva (5.112 mln euros).

Q. At the beginning of October you filed your IPO prospectus with the FSC. Can you mention a specific timeframe in which you expect the IPO to take place and when will secondary trade start on BSE?

We are expecting the FSC's opinion by the end of this month, but until then we can not set any dates or timeframes. I honestly hope that Agria Group Holding's shares will be successfully subscribed by potential investors by the end of 2007, and after than will be listed for secondary trade on BSE in compliance with all regulations.

Q. In case of a successful IPO the minimum amount Agria Group Holding will generate is 15.3 mln leva. How will it be invested?

We are following a consistent and at the same time very aggressive investment strategy. The biofuel plant will consume a considerable part of our investments, and approximately 50% of the IPO proceeds.

We will use the rest to increase the capital of our subsidiaries in order to enhance modernization of production, to increase production capacity, to acquire necessary equipment under EU operating programs, to acquire arable land plots, and new equipment under the operating program for Competitiveness etc.

Q. Is there already an interest in the issue and what type of investors do you think will be interested in it?

There are currently not many companies on the BSE operating in the fields of agribusiness, renewable energy sources and biofuels. Taking into consideration this and the results from some research we have done, I think there will be many investors interested in our stock, both in order to diversify their portfolio risk, and to be able to participate in financial speculations on the BSE.

Q. How do you intend to achieve the growth of financial results by 2012 you mentioned and what could be a problem on your way?

In the past several years (2004 - 2006) Agria Group Holding has managed to acquire and create well-working enterprises in the filed of agribusiness, that are competitive on the free European market.

All subsidiaries meet the criteria for participation in the EU programs on development of Bulgarian economy.

Q. Can you mention some of the larger projects of your subsidiaries and how much would they cost?

The largest project is no doubt the construction and operation of a biofuel plant in Devnya. The holding's investments program is worth 15 – 16 mln euros, and the biodiesel plant will consume more than 50% of it.

We will invest the rest in our food industry enterprises and in our agricultural business, that is in land acquisitions, purchasing agricultural equipment, creation and operation of irrigation systems.

Q. More and more Bulgarian agribusiness companies are deciding to raise capital on the stock market. What do you think of that fact?

In the past two or three years the agricultural business is considered one of the strategic branches of economy on both national and international level.

This is because our branch provides the raw materials for other branches of economy such as cattle breeding, food industry, and food processing industry. What is more, grain is becoming important in biofuel production, as a renewable energy source, which is also part of the EU strategy in its fight against global warming and gas emissions in the atmosphere.

This is why a lot of investors are interested in the sector, it is developing dynamically, and receives a lot of funding under EU operating programs. This is a very attractive sector for investors worldwide and Bulgaria will be no exception.

Q. Can we compare the current state of agricultural business in Bulgaria now and before 1989? Are you pro- or con- to land consolidation?

As I said, the agricultural business is entering a new stage of development these days. This why people are beginning to be interested in cultivating grain and in arable land again.

Land consolidation is a very important process in agriculture as it helps cultivation. This is a natural process in which the land owners change from small farmers to big land owners, to big companies and institutional investors.

According to the Agricultural Ministry, some 2 – 3% (900,000 decraes) of land changed ownership last year alone. In 2005 there were 67,000 transactions in which 600,000 decares changed owner. This once again proves the interest in agribusiness.

Q. What is the amount of funds directed to Bulgaria via European Funds and are there any priority areas for its allocation?

After Bulgaria's EU accession the country has undertaken to abiding to the European agricultural practices. This means that all structural funds and operating programs of the EU will be implemented in Bulgaria as well. The main program of the EU on development of agricultural business is the Operating Program For Development Of Rural Areas (2007 – 2013) requiring some 3.241 mln euros, of which nearly 80% provided by the EU and 20% from the national budget.