Troika Potato Chips (A)1
St. Petersburg, Russia
J
ohn M irren drummed his fingers impatiently on the
dashboard as he sat in the usual M osco w tra ffic
jam. He w as a managing director o f a Britisho w n e d, M osco w-b ase d invest me n t f u n d t h a t ma d e
investments in various businesses throughout Russia.
John sa w many business plans, written w ith various
degrees o f competence, every w eek, and he had to
decide w hich ones w arranted f urther investigation. As
part o f his job, he visited companies that seemed especially promising.
John le f t his job at a London investment boutique in
1990 to take a job in Russia at a time w hen Russia w as
considered the land o f unlimited opportunity. He had a
background in the region because he studied Russian
history, literature, and language in university and had
spent a year in St. Petersburg writing his senior thesis.
As managing director o f the investment f und, he had
been extensively involved in evaluating and managing
many projects, a f e w o f w hich turned out to be spectacular successes, but many o f them barely broke even
and some w ere complete f ailures.
That w eek he w as considering several plans. There w as
a f urniture f actory in Novosibirsk that w as making good
quality copies o f Russian Empire f urniture, as w ell as
more modern f urniture, and it needed investment
money to expand operations. A n interesting proposal
— to open a f ast f ood restaurant in Yekatrinburg —
had come into the o ffice last w eek. That seemed very
promising since the potential manager had considerable restaurant experience, both domestic and international. There w as also a proposal to open sorely needed
self-service laundries in M osco w. Ho w ever, that propos-
36
al needed care f ul examination since they w ere asking
f or a considerable sum o f money.
A m ore m o d est b usin ess pla n h a d co me fro m St.
Petersburg. Three diff erent legal entities with experience and expertise in diff erent fields had joined together to propose a company to produce and sell potato
chips to the St. Petersburg market.
T he f ormal business plan f or this proposed startup f ollo ws. John had to decide if the business w arranted his
investment, given all he had learned about investing in
Russia (see A ppendix).
Business Plan2
Summary
T
he proposed project envisions the establishment
o f a ne w enterprise that will produce high-quality, co m p e titively-price d p o t a t o chips in t h e
to w n o f Komarovo, not f ar from St. Petersburg. 3 The
initiators have f ormed a separate legal entity called
“ Troika ” specifically f or the purpose o f realizing the
project. Th e p o t a t o chips w ill b e sold u n d er t h e
“ Troika ” brand name.
The initiators hope to attract an outside equity investor
and use the invested f unds to purchase specialized,
high-quality, imported processing equipment that will
enable them to produce and package w orld-class potato chips to be sold through both w holesalers and retailers in the Leningrad O blast (region).
The preparatory stage has been completed, and practically all key aspects have been w orked out by the ini-
TROIKA POTATO CHIPS (A)
tiators. The enterprise has acquired a production site
(building and land) and a specialized potato storage
f acility. W ith the purchase and installation o f processing
equipment, and a complete renovation o f the production site, production can begin. A preliminary agreement to purchase equipment has been reached with a
Dutch firm considered a leading producer o f f ood processing equipment.
The principal ra w ingredient, potatoes, w ill be supplied
by the agricultural consortium Komarovo w hich is one
o f the f ounding partners in Troika.
The financial requirements f or the realization o f the
above project are as f ollo ws: an equity investment o f
$803,600 f or the purchase o f production equipment,
and a short-term credit o f $236,000 f or startup capital.
The time frame f or the realization o f the project is 10.5
years. The expected net pro fit at the end o f this period
is $2,269,000. Pro fits w ill be reinvested to modernize or
expand existing operations or used to start a ne w venture.
The Enterprise
GENERAL INF ORM ATIO N
Troika is registered as a closed joint-stock company in
the to w n o f Komarovo, Leningrad O blast. 4 The venture’s principal activity is the processing o f agricultural
products, specifically, the production o f potato chips.
Troika’s f ounding partners are three independently regist ere d org a niz a tio ns. Th e first is t h e a gricult ural
Consortium “ Komarovo, ” a closed joint-stock company
w hich w as a state-o w ned f arm until 1994. Komarovo
o w ns 11,500 hectares o f f arm land, and it is the largest
producer o f potatoes in Russia’s north w estern region.
The second is “Baikal, ” a joint-stock company f ormed in
1995 by a group o f producers, w holesalers, and retailers
o f f ood products. 5 Together, Baikal’s shareholders make
u p a d evelo p e d distrib u tio n n e t w ork coverin g St.
Petersburg and the surrounding region. The last is
“ Znamya, ” also a closed joint-stock company w hose
principal activity is processing agricultural products.
Baikal - access to a distribution net w ork coverin g t h e CIS, co n trib u tio n valu e d a t
40,000,000 rubles;
Znamya - potato storage f acility valued at
20,000,000 rubles.
The initiators agreed that Baikal w ould withhold its
cash contribution o f 40 million rubles until the purchase
and installation o f production equipment. Thus, as o f
July 1, 1995, 60 out o f 100 shares o f common stock w ere
paid f or in f ull.
APPRAISING M ARKET VALUE O F
STOCKH OLDERS’ EQ UITY
Since Troika is a ne wly created enterprise, it has not
incurred any debt or losses. The fixed assets o w ned by
the company are as f ollo ws:
land
building
potato storage f acility
1.5 hectare
420 sq. meters
480 sq. meters
In ord er t o minimiz e t axes, t h e Fo u n din g Ch art er
assigns to assets the lo w est possible value allo w ed by
Russian la w. The actual market value o f these assets is
significantly higher. 6 For example, the cost o f property
in the area is bet w een $10,000 and $15,000 per hectare.
The cost o f constructing a similar building is $84,000,
and the storage f acility has been appraised at $60,000.
Thus, the actual market value o f Troika’s fixed assets is
approximately $159,000 but that w ould fluctuate as the
political and economic climate in Russia changes.
DECISIO N M A KING
Regular shareholder meetings are to be held t wice a year.
A dditional meetings can be initiated by a shareholder
holding a minimum of 25% of common (voting) shares.
Decisions can be approved provided shareholders holding
a minimum of 50% of voting shares are present. Critical
decisions, such as changing the Charter, re-organization,
and liquidation of assets, require a 75% presence.
Troik a w ill b e m a n a g e d by a Bo ard o f Direct ors,
appointed by shareholders, with A lexander I. Ivanov
serving as chairman.
CO NTRIBUTED CAPITAL
PRO FIT SH ARING
As o f July 1, 1995, st ock h old ers’ e q uity t o t als
100,000,000 rubles [US$1 = 5,000 rubles at that time].
There are 100 shares o f common stock, each w ith a
n o min al valu e o f 1,000,000 ru bles. K o m arovo a n d
Baikal each o w n 40 % o f the shares, and the remaining
20 % is held by Znamya.
Net pro fits w ill be distributed among shareholders as
dividends. The dividends are to be approved at general
shareholder meetings.
Th e f o u n d ers o f Troik a co n trib u t e d t h e f ollo w in g
assets, in lieu o f cash, f or shares in the enterprise:
Komarovo - building and land to be used f or production, valued at 40,000,000 rubles;
The Product
Troika potato chips w ill be produced and packaged
with equipment manu f actured by a Dutch firm, Florigio
Industrie, using only natural, high-quality ingredients.
The principal ra w ingredient is potatoes, not the customary processed potato concentrate, so as to give the
finished product a more natural potato taste and smell.
37
CASE STUDIES
Florigio Industrie is a leading producer o f f ood-processing technology. This technology will enable Troika to
produce both regular chips and flavored chips up to the
highest w orld standards. The chips will be packaged in
100 gram plastic packets bearing the company logo.
Highest quality packaging materials (also Dutch) w ill be
used, ensuring the chips remain fresh f or up to six
months. Package labeling w ill be in Russian.
Since potato chips are neither a staple nor a luxury
product, demand is determined by price and quality.
Troika chips will be cheaper than imported brands and
o f higher quality than domestic brands, so it is expected that they will be very popular.
Analysis of Market and Competition
Potato chips w ere produced locally in the 1960s and
1970s, t h e n disco n tin u e d u n til 1992. Local m ark e t
research indicates that the product currently enjoys a
90 % a w areness among the population.
In St. Petersburg, Western-style supermarkets selling
brand name, imported products carry the w idest assortment o f potato chips. These supermarkets cater to consumers with high purchasing po w er. Potato chips are
also available in f ood stores selling primarily Russian
products and in 10 to 15 % o f all kiosks. 7 These stores
o ff er a narro w er range o f products and usually carry no
more than t w o brands o f potato chips.
M arket research sho ws that about 60 % o f the local
population consumes potato chips with some regularity. A large segment o f potato chip consumers is aged
bet w een 5 and 18. A t the moment, the market has no
obvious leader.
Since market research indicates that potato chips are a
price elastic product in high demand, it could be concluded that expanding the consumer base by lo w ering
the price w ould greatly increase sales. A consumer survey conducted by the St. Petersburg State University
Economics Department con firms this f act, sho wing that
90 % o f potential buyers o f potato chips re frain from
buying due to high price. The remaining 10 % choose
not to buy because o f perceived lo w quality or f or some
other reason. The survey also f ound that lo w ering the
price o f potato chips by 30 % makes them a ff ordable to
20-30 % o f potential consumers, compared to the 10 %
potential buyers w ho can a ff ord to buy them at today’s
prices.
Troika’s main competitors are f oreign producers, f ollo w ed by domestic producers. Domestic competition is
not likely to become a f actor f or at least 3 to 4 years.
Presently, the region is supplied by Finnish, Dutch,
Isra eli, a n d A m erica n pro d ucers. Re t ail prices f or
imported potato chips sold in elite supermarkets are
bet w een $.95 and $1.65 per 100 g package, making
38
them a ff ordable to only 7-10 % o f the population.
O ther stores sell chips at comparatively lo w er prices,
from $.75 to $.90 per 100 g. These chips are produced
by Russian, Baltic, and Polish companies.
Some w idely distributed brands o f potato chips and
their prices per 100 g package are as f ollo ws:
SUPER
(Holland)
$1.12 to $1.52
SPECIAL SN ACKS
(M osco w)
$ .56
MINI SN ACK
(Israel)
$1.43
RA FFLES
(Poland)
$1.74
Koloss, another major domestic brand, is also relatively
inexpensive. Due to a number o f f actors, primarily high
tariffs, retail prices o f imported chips are kept relatively high. Thus, only a limited number local w holesalers
can a ff ord to purchase potato chips from abroad. In
f act, a survey o f the w holesale market sho w ed that
imported potato chips are distributed by only three o f
the 15 largest w holesalers o f f ood products in the area.
O f the 20 largest supermarkets in St. Petersburg, only
f our sell potato chips. These figures demonstrate that
choice and availability o f potato chips in St. Petersburg
and the surrounding area is limited.
A t the moment, no local producers o f potato chips use
imported, high-quality equipment. In general, the simple, lo w-tech processes employed by these companies
make them incapable o f producing on a mass scale.
Furthermore, the packaging o f local chips is not consistent w ith w orld standards.
A care f ul pricing strategy, a high quality product, and
good packaging w ill enable Troika to successf ully compete w ith local as w ell as f oreign producers. Troika chips
will diff er from imports in price (30-40 % cheaper), and
from domestic substitutes in quality and packaging.
Until more local mass-producers o f potato chips enter
the market, w hich is not likely to occur f or the next
three to f our years, the demand f or the product w ill
remain unsatisfied. By the time equilibrium is reached,
Troika is expected to have gained a 5 % share o f the
local market, producing and selling 289 tons o f chips
per year.
In summary, the market situation can be characterized
as f ollo ws:
absence o f a clear market leader
limited choice and availability o f high quality potato
chips
high price elasticity f or the product
slo wly but steadily increasing demand
increased domestic competition in the next three to
f our years
TROIKA POTATO CHIPS (A)
Marketing and Pricing Strategy
develop strategy and manage all marketing e ff orts.
The marketing plan consists o f three general components: (1) pricing strategy, (2) advertising campaign,
and (3) continuous analysis o f the changing market situation and integration o f ne w in f ormation into overall
strategy.
It is estimated that within the first t w o years o f the project, the cost o f advertising will reach approximately
$15,000 annually. As local competitors enter the market, advertising expenditures will be increased and the
advertising strategy will be modified accordingly. A t
this stage, advertising w ill become more aggressive,
f ocusing on maintaining market position as w ell as on
attracting buyers o f other brands. A dvertisements on
local radio and television will be added at this time. By
the third year, advertising expenditures are expected to
increase to about $25,000 annually.
The product’s competitive advantage is based on its:
• high quality
• image (modern, eye-catching package design)
• lo w production cost (use o f locally gro w n
potatoes)
• being ahead o f domestic competition
Since m ark e t rese arch sh o ws t h ere is u n m e t local
demand, Troika chips will be marketed initially in the St.
Petersburg region using Baikal’s distribution net w ork o f
over 400 selling points. W hen the local market is saturated, other regions w ill be explored.
Troika has obtained all necessary licenses, including certification from the M inistry o f A griculture, to produce
and sell its products.
Organization of the Production
Process
In the first five years, gro w th in sales will be based on
the expansion o f the consumer base rather than on the
elimination o f competition. Troika chips w ill be priced
on average 35 % cheaper than imports, and 10-20 %
ch e a p er t h a n d o m estic su bstit u t es, m a kin g t h e m
a ff ordable to a larger segment o f population.
The initiators have w orked out all key operational
aspects. A ll actions w ill be perf ormed according to the
schedule sho w n in Exhibit 1. The preparatory stage,
during w hich equipment w ill be installed, building renovated, and personnel trained, will last six months. Full
production capacity is expected to be reached f our
months a f ter the start o f production.
The minimum w holesale price o f $0.4125 allo ws retail
prices to be maintained at competitive levels. The use o f
local potatoes minimizes expenditures on the principal
ra w in gre die n t, since p o t a t o es su p plie d by o t h er
regions have a 10-15 % mark-up re flecting added transportation costs. Ra w material expenses (potatoes, oil,
spices, etc.) constitute 80 % o f total production costs
(Exhibit 6). Competitive pricing will allo w Troika to realize its sales objectives.
The production line requires a space measuring 200
square meters with a height o f 3 meters. W ith the completion o f renovation, w hich includes replacing electrical and w ater provision systems, the production site will
satisfy all technical requirements. Beyond housing the
production line, the building will contain an o ffice,
kitchen, bathrooms, and space f or storing packaging
materials. The site is easily accessible from a major highw ay.
Product image w ill play a significant role in attracting
potential buyers. The chips will be packaged in multicolor polypropylene packages that prominently display
the Troika brand name. The packaging will be modeled
a f ter Western standards both in quality and presentation and in guarantees o f freshness. In order not to
alienate Russian buyers, in f ormation and company logo
displayed on the package will be in Russian. 8 The product w eighs 100 g and will be distributed to retailers in
cardboard boxes.
A n agrarian specialist will be hired to ensure that the
potatoes purchased are o f the highest quality. To prevent rotting, the potatoes will be stored in a specially
adapted w arehouse. A permanent contract w ith the
potato supplier Komarovo is in e ff ect. The Consortium
o w ns 300 h ect ares o f f armla n d, e ach pro d ucin g
bet w een 16 and 18 tons o f potatoes per year. Vegetable
oil will be supplied by ARK O , a company located in a
city about 400 miles south o f St. Petersburg. The initiators o f Troika have close ties with this supplier as w ell.
The product w ill be promoted through a multi-stage
advertising campaign utilizing printed and electronic
media. The first stage o f the campaign w ill f ocus on
gaining maximum exposure and creating brand a w areness f or Troika potato chips. The product w ill be introduced with printed advertisements placed in buses,
metros, trains, and points o f purchase. Promotions will
be held at trade f airs, at local civic celebrations, and in
schools. A qualified marketing manager will be hired to
The production equipment supplied by the Dutch firm
Florigio comes w ith enough spare parts f or one year o f
operation. The choice o f Florigio as equipment supplier
is based on (1) its competitive price among imported
analogues, and (2) its higher quality compared to similar domestic equipment. The production line is capable
o f processing 400 kg o f potatoes per hour, resulting in
100 k g o f finish e d p o t a t o chips every h o ur.
A pproximately 5 % o f completed product is expected to
39
CASE STUDIES
be de f ective. Florigio w ould also supply packaging
materials that come imprinted w ith the company logo
and product in f ormation in Russian.
Production will go into recess during July and A ugust
w hen harvested potatoes are unsuitable f or potato
chips. The enterprise plans to hire a 22-person sta ff. The
technical personnel w ill undergo a training session conducted by Florigio experts w ho w ill remain t w o months
at the Troika production site. Training expense totals
$7,500 and is included in the budget. A ll equipment
maintenance w ork w ill be perf ormed by specialists
trained by Florigio.
Risk Factors
The f ollo wing list identifies some o f the risks f acing the
enterprise.
1. Hig h ra t e o f in fla tio n, co u ple d w it h fre q u e n t
changes in tax and licensing requirements, encumbers long-term financial planning and cost estimation.
stabilized, they are seeking an outside investor. This
investor will be o ff ered ne w ly issued stock in the enterprise. The total amount required o f the investor is
$837,100. The initiators w ill contribute $132,700.
Funds w ill be invested in the enterprise in the f ollo wing
order:
1. Baikal will contribute 40,000,000 as payment f or its
shares in the enterprise (40 shares at nominal price
o f 1,000,000 rubles). 9
2. Redistribution o f common shares: Komarovo and
Baikal will purchase 10 and 5 shares each, in that
order, from Znamya.
3. The second stock o ff ering will be organized, and an
equity investor brought in.
A f ter the outside investor is brought in, common (voting) shares w ould be distributed as f ollo ws:
2. The initiators have no experience in potato chip production.
3. A bad potato harvest could have a negative impact
on quality, quantity, and price o f potato supplies.
4 The break-up o f the f ormer Soviet Union has ruptured old inter-regional ties that f ormerly guaranteed a regular supply o f ra w materials.
5. The start o f production could be postponed due to
delays in delivery and installation o f equipment or a
delay in the completion o f building renovation.
6. The initiators could encounter difficulties in obtaining financing.
7. Competitio n from d omestic pro d ucers may have
greater impact than expected.
A ll o f the above f actors are taken into consideration in
making financial projections.
The organizers are engaged in a search f or an additional so urce o f p o t a t o es in case t h ere are pro ble ms
with the contracted suppliers. Competition from local
producers w ill not be a f actor f or at least three to f our
years and there f ore will have no negative impact on the
economics o f the project in the first stages. W hen competitors do enter the market, Troika w ill have established a strong market presence w ith its products enjoying wide brand a w areness.
investor:
up to 40 %
Baikal:
25-30 %
Komarovo:
30 %
Znamya:
up to 5 %
Limiting the investors’ share to a maximum o f 40 % o f
common stock is a condition set at the insistence o f the
Leningrad O blast A dministration, w hich is a 49 % o w ner
o f Baikal.
A ll pro fits will be distributed as dividends in proportion
to o w nership stake. Priority will be given to shareholders w hose contribution financed the purchase o f equipment and the renovation o f production site.
Troika proposes to issue 65 additional shares o f common stock and 43 shares o f pre f erred stock o f Type A
and Type B. The holder o f pre f erred shares has no voice
in the management o f the enterprise, but has priority in
dividend distribution.
DISTRIBUTION OF SHARES AMONG THE STOCKHOLDERS
AFTER SECOND STOCK OFFERING
DISTRIBUTION OF
COMMON SHARES BEFORE
INVESTMENT
Komarovo
Baikal
DISTRIBUTION OF
COMMON SHARES AFTER
INVESTMENT
Number
of shares
%
Number
of shares
40
40
40
40
50
45
%
DISTRIBUTION OF
PREFERRED SHARES
Type A
Type B
30.3
27.27
——
——
——
14
Znamya
20
20
5
3.03
——
——
Investor
——
——
65
39.39
29
——
100
100
165
100.00
TOTAL
43
Financing and Distribution of Profits
The initiators considered t w o possible methods f or
financing the purchase o f equipment: leasing and equity investment. Since leasing la ws in Russia have not yet
40
The f ace value o f each share w ould remain 1,000,000
rubles. A f ter the second stock o ff ering, Troika’s stockh old ers’ e q uity w ill h ave a n o min al valu e o f
TROIKA POTATO CHIPS (A)
208,000,000 rubles. 10 Pre f erred stock w ould constitute
20.7 % o f total capital, w ell within the bounds o f the
la w w hich places a 25 % cap on pre f erred shares. Shares
w ould be sold at a price o f $8,905 per share. The
investor w ould acquire 94 shares (65 common, 29 pref erred) f or a sum o f $837,100; Baikal w ould purchase 14
ne wly issued pre f erred shares f or $124,700.
Setting the actual price above the nominal price w ould
have no tax implications. According to Russian securities
la w, w hen shares are sold to raise starting capital, the
diff erence bet w een nominal and actual price paid f or
each share is considered additional paid-in capital, not
as taxable revenue.
Net pro fit w ill be distributed in the f ollo wing order: (1)
fixed dividends are paid to holders o f pre f erred stock
Type A , (2) dividends are paid to holders o f Type B
shares, (3) the remainder w ill be distributed among
holders o f common stock. Common and Type B stock
holders will not receive any dividends until the holders
o f Type A stock are f ully reimbursed the amount o f
investment ($837,100). A f ter the f ourth year, the 29
shares o f pre f erred stock type A guarantee the investor
a dividend income o f $160,000 (Exhibit 9). Holders o f
Type B shares w ould receive yearly dividends o f $9,000,
starting in the fif th year o f operation.
Since there is no undistributed income (retained earnings) at the end o f the ten year realization period, the
value o f o w ner’s equity w ould equal the nominal price
o f shares plus additional paid-in-capital. Initial stockholders’ equity w as f ormed with each partner’s contribution (land, building, etc.). The maximum market
value o f stockholder’s equity be f ore the second stock
o ff ering is appraised at $159,000. Taking depreciation
into account, this value is reduced to $123,000 at the
end o f 10 years. The total market value o f Troika’s assets
is there f ore $1,084,800: $123,000, the depreciated value
o f stockholders’ equity be f ore second o ff ering, plus
$961,800, the increase in stockholders’ equity a f ter second stock o ff ering.
A t t h e e n d o f t h e 10-ye ar o p era tio n p erio d, t h e
investors will have the option o f selling back all pref erred shares. Type A shares will be re-purchased f or
$692,000, and Type B shares, held by Baikal, f or $32,000.
Th e su bse q u e n t m ark e t valu e o f Troik a’s co m m o n
shares will be $369,000. 11 Holders o f pre f erred stock
w ould also have the option to convert their holdings
into common stock.
Financial Planning
A ll major expenditures will be made in accordance with
the w ork schedule (Exhibit 1). Funds w ill be used primarily to:
• purchase equipment
• renovate the production site
• purchase transportation vehicles
• create a reserve f und
The three sources o f financing are as f ollo ws: equity
invest m e n t, initia t ors’ co n trib u tio n, a n d sh ort-t erm
credits. Short-term credit is needed to satisfy initial
w orking capital requirements. The first credit, totaling
$188,000, will be f or a three months and w ill be used to
pay the VAT on the imported equipment. The second
credit, totaling $48,000, w ill be f or f our months and will
be used to purchase potatoes, oil, and other inputs.
Principle and interest expense (30 % annually) on these
loans will be paid out o f sales revenue.
The initiators will purchase automobiles f or delivery o f
the product and pay the f ull cost o f renovating the
building out o f their contributed f unds. Equity investment w ill be used primarily f or purchasing production
equipment.
Financial projections are provided in attached Exhibits 2
- 9. Exhibit 6 sho ws production expenses with a 5 %
de f ect rate. Purchases o f ra w materials, particularly
potatoes, make up the largest portion o f expenses.
Results o f an analysis o f potato price movements sho w
that prices are stable, indicating that the market is in
equilibrium. Potato prices in St. Petersburg re flect the
average w orld price o f the commodity. 12
Prices o f ra w materials and maintenance costs are projected to rise 2 % per year, beginning in the third year
o f production. Salaries are projected to rise 5 % per year
in the first f our years, and 3 % per year f or the remainder o f the ten year period. By basing projections on rising cost f or inputs and stable selling price f or the product, the initiators compensate f or the possibility o f an
unexpected adverse turn o f events.
Break-even analysis sho ws that the enterprise must produce 121 tons o f potato chips per year to break even,
only 42 % o f its capacity. Cash flo w projections (Exhibit
8) sho w that sales revenue will be su fficient to cover all
production and dividend expenses and f uture pre f erred
stock repurchase.
Troika’s projected income statement (Exhibit 9) also
sho ws positive results, even in the first year o f production. Income is projected to gro w from $126,000 in the
first year to a $263,000 in the f ourth year, and gradually decrease to $216,000 in the tenth year. Income gro ws
as a result o f increased production e fficiency and then
declines because projected expenses rise w hile selling
price is maintained constant. The enterprise is expected
to generate an average return o f 23 % on investment. A
portion o f these earnings can be reinvested to modernize and expand current operations, or as starting capital
f or a ne w enterprise.
41
CASE STUDIES
Attitude toward Law and Contracts
Appendix
CULTURAL AND SOCIOLOGICAL NOTES
The Russian Sense of Time
A Russian’s sense o f time may diff er markedly from an
A merican’s. W hile A mericans w atch situation comedies
w here everything ends happily in a half-hour, the traditional Russian pre f ers three hour-long operas and theater pieces w here a bad situation gets w orse, people
get emotional, and apparently nothing is resolved at
the end. W hile A mericans like to come quickly to the
point and summarize their interests in a f e w sentences,
Russian general managers usually choose to explain
their corporate history and general philosophy be f ore
talking about specifics. This is o f ten due to the Russian
need to establish a relationship w ith a potential business partner. Ho w ever, this diff ering sense o f time can
lead to con f usion and a sense o f distrust during initial
meetings.
Openness versus Secrecy
Russia is a country that has been invaded many times
during its history. Because o f this legacy, Russians tend
to keep their w ealth and their business dealings secret.
Just as a Russian peasant hid his grain, a Russian business tends to conceal its income, assets, and technological secrets. Russians are o f ten reluctant to share in f ormation over the phone or in letters, and pre f er at least
a f ace-to-f ace meeting be f ore going f orw ard with
details.
Obedience versus Autonomy
A nother pain f ul legacy o f Russian history is servitude.
Up to the middle o f the 19th century, the majority o f
Russians w ere peasants, w ho essentially w ere the property o f local lando w ners. The peasants f ollo w ed the
lando w ner’s orders and w ere not permitted to move or
change jobs without his permission. Under the Soviet
system, the entire economy w as centrally planned. A t
the time o f this case, Russian decision making, particularly in large organizations, still came from the top. The
Russian employee traditionally had little or no autonomy, and, during this transition to capitalism, many
Russians w ere still reluctant to make decisions w ithout
consulting superiors. This cultural diff erence ba ffles and
frustrates many A mericans. The Russian decision-making process w ill seem very slo w to an A merican, with
inexplicable starts, stops, and reversals. A merican managers o f ten must w ait f or months f or a final decision to
come from the top on matters already revie w ed by layers of Russian managers. During the first fe w months
w orking for a Western firm, ne w Russian employees
often exasperate their A merican managers with their
continual requests for precise instructions and direction.
42
For many years, Soviet la w vie w ed capitalism and business as a social evil. For many Russians, the idea that
la ws could actually help build companies is relatively
ne w concept. W hile A mericans pre f er to base their busin ess rela tio nships o n le g ally e n f orce a ble co n tracts,
many Russians still doubt the value o f and lack respect
f or business la ws and contracts. M any Russians pre f er to
keep their business dealings and accounts as f ar from
government scrutiny as possible.
The Importance of Relationships
M ost Russians business dealings are based on personal
rela tio nships. W h e n m a kin g b usin ess d ecisio ns,
A mericans tend to f ocus on comparing contracts and
prices. Russians, on the other hand, compare the depths
o f personal relationships. M ost Russians pre f er to do
business with people w ho are close friends. W ithout a
close personal relationship, o f ten one that seems so
close as to be claustrophobic to a Westerner, a Russian
business deal is on shaky ground. For A mericans, the
contract is usually the centerpiece o f negotiating sessions. For the Russian, the relationship is the f ocal point,
and contracts and protocols are o f ten merely thought
o f as polite ceremonies and starting points f or f urther
negotiation. Because Russians consider their business
partners to be friends, Russian business leaders o f ten
have trouble saying no, and w ill promise things they
cannot — or do not w ant — to deliver.
M ost deals are done on the basis o f a verbal agreement,
w here both sides actually appear to be embarrassed to
bring any f ormalities into the process. This is one o f the
major f actors contributing to an enormous crisis in the
early 1990s stemming from the f ailure o f almost everyone to pay their debts. The combined debt that enterprises o w ed to each other amounted to trillions o f
rubles, and a significant part o f that w as not supported
by proper documentation.
Organized Crime
Dealing with organized crime is f undamental to doing
business in Russia. Typically, banks have in f ormers w ho
tell the M a fia organs about incoming f unds (sums
above 10 million rubles.) Equipped with this in f ormation, the M a fia attempts to extort money from the
enterprise. Insistent young men approach the management, in teams o f three or f our people. Having made an
appointment, they announce that they have come to
discuss the topic o f “ protection ” or are representatives
o f tax authorities or the police. They o ff er their “services” in the f orm o f protecting the lif e o f the firm’s
o w ners and sa f eguarding o f goods and property o f the
firm. If the o w ner re f uses, they start explaining, very
politely, that they can provide very e ff ective personal
security, and then, depending on the reaction, they
st art givin g o u t in f orm a tio n a b o u t t h e co m p a ny
TROIKA POTATO CHIPS (A)
obtained from the bank, about the goods stored in the
w arehouse, his w if e’s place o f w ork, the time his children are in school and all sorts o f compromising in f ormation. If there is still no reaction, direct threats are
brought into play.
Ultimately, most enterprises conclude security agreements with organized crime groups. According to standard contracts, the director has to make a monthly payment on a strictly de fined day to a particular person.
The sum is set depending on the turnover and the
amount o f compromising in f ormation about the firm.
In t h e eve n t t h a t re prese n t a tives o f o t h er gro u ps
approach the firm, the directors must prove that they
already have protection or krysha (roo f), so that representatives o f the M a fia groups sort out bet w een themselves questions concerning turf and w hat belongs to
w hom.
If a company does not have a krysha, it becomes difficult to conduct business, especially receiving payments,
and the company is totally exposed. But if one does
have krysha, one is breaking the la w, placing oneself
outside o f it in the realm o f the in f ormal and vague.
The relationship w ith one’s krysha is very important,
but at the same time it makes one a part o f a net w ork,
thereby severely restricting one’s freedom.
Working with Russian Partners
A lthough each investment opportunity presented its
o w n unique set o f characteristics and challenges, John
f ound that there w ere many common elements and pitf alls w hen dealing w ith Russian partners as a f oreign
investor. For example:
• M ost Russian entrepreneurs do not have a
current, updated packet o f in f ormation about
their enterprise and/or project. A t the initial
meeting, they w ill most likely present old
in f ormation and explain the project-at-hand
orally, or as the Russians say, “ using their fingers. ” Because written data seldom matches
w hat is transmitted orally at the initial meeting, a f oreign investor, upon revie w ing the
in f ormation packet, could become con f used
and distrust f ul.
• Russian citizens have gro w n accustomed to
b ein g secre tive, a survival trait d evelo p e d
w hile livin g u n d er a t o t alit aria n re gim e.
Consequently, the Russian entrepreneur is psychologically unprepared to reveal immediately all required in f ormation about his enterprise or project. He provides partial in f ormation, assuming that is su fficient f or analysis. If
obtaining in f ormation about a project or company begins to f eel like pulling teeth, the
investor may become suspicious and reluctant
to proceed f urther.
• Russian entrepreneurs are not used to the
language and protocol f or attracting equity
financing. They may ask potential investors to
specify their requirements and then come up
with a project to fit those requirements.
• Russian businessmen vie w un f avorably the
Russian assistants employed by f oreign consulting firms and investment f unds. M ost o f
these jobs are filled by young bilingual Russian
“consultants” w ith some rudimentary kno wledge o f Western finance, but with virtually no
experience in managing a business in Russia
and a limited understanding o f Russia’s business climate. In w orst cases, they become a
bu ff er bet w een the investor and the entrepreneur, filtering and sometimes misrepresenting
in f orma tio n a b o u t t h e invest me n t project.
Generally, Russian businessmen pre f er to stay
in direct contact with the investor.
• The majority o f Russian entrepreneurs are
n o t accust o m e d t o valuin g o t h er p e o ple’s
time, or paying f or in f ormation or consulting
services.
Working and investing in Russia is a continual learning
process. The road to success is o f ten paved w ith mistakes. During his stay, John made plenty o f mistakes. He
w as able to identify the f ollo w ing lessons or “ guidelines
f or practice ” learned through his experience:
• A t the initial meeting, set the tone and language f or f uture discussions (w hoever has the
money gets to make the rules).
• M ake a clear and firm request f or all necessary in f ormation. If the requested in f ormation
is not presented at the f ollo wing meeting, end
the meeting, clearly explaining the reasons f or
doing so.
• If you receive the necessary documents and,
a f ter evaluating them, re f use to finance the
project, return the packet o f in f ormation with
an o fficial letter explaining your decision.
• Be f ore m a kin g a ny d ecisio n, co nsult a
Russian expert. The most qualified experts are
la w yers w h o are o n t o p o f curre n t le g al
changes and kno w the system, or entrepreneurs w ho have had first-hand experience
running a business in Russia. Some caution
should be exercised in taking advice from f oreign or Russian consultants w ho have no experience managing a business in Russia.
• The quality o f management takes precedence over financial projections as the most
43
CASE STUDIES
important f actor in evaluating potential projects in Russia. Because the instability o f the
Russian market makes long-term planning virtually impossible, most Russian entrepreneurs
regard the business plan as a f ormality in
attracting f oreign capital rather than an actual blu e prin t f or ru n nin g t h eir b usin ess.
There f ore, the investor should concentrate on
those sections o f the business plan w hich give
some indication o f management’s style and
degree o f pro f essionalism. These sections may
deal with marketing research, risk assessment,
sensitivity analysis, and project realization.
• In order to live through the years o f economic transition, w hich is f ar from complete,
Russian business people developed certain survival traits and habits. A dearth o f in f ormation, un f air taxation, and rampant corruption
h ave m a d e t h e m very ca u tio us, w hile a n
unstable legal and economic in frastructure
has made them extremely competent in analyzing and quickly responding to ne w risks and
obstacles. Consequently, a Russian entrepreneur can quickly assess and exploit any w eakness or incompetence he perceives in a potential business partner.
N OTES
1. This case w as w rit t e n by Ge n e G u t e n b erg o f Corn ell
University. It is intended as a basis f or class discussion rather
than to illustrate either e ff ective or ine ff ective handling o f an
administrative situation.
2. Actual business plan presented to investors. A ll names have
been changed.
3. Second largest city in Russia with a population o f 5.5
million.
4. Enterprise w hose shares are not publicly traded. Similar to
a limited partnership.
5. Enterprise w hose shares are publicly traded.
6. It is beyond the scope o f this case study to discuss the intricacies o f the Russian accounting and tax systems. It is highly
recommended that a qualified Russian la wyer be consulted in
all commercial transactions.
7. A small street shop that primarily sells snacks, cigarettes,
and alcoholic and non-alcoholic beverages.
8. So m e pro d ucts h a d act u ally b e e n less successf ul w it h
Russian labeling, as Russian’s equated Western products with
higher quality. For example, Pepsi Cola’s sales dropped w hen it
labeled its products in Russian.
44
9. It w as agreed that Baikal w ill hold its cash contribution
until the purchase o f equipment.
10. [(165 + 43) x 1,000,000].
11. These figures add up to $1.093 million, w hich contradict the
$1.084 million total stockholders’ equity amount given in the
previous paragraph. The amounts are taken from the actual
business plan.
12. Potato prices on the London and A msterdam commodity
exchanges ranged bet w een $215 and $271 per ton during
1994-1995 season.
TROIKA POTATO CHIPS (A)
Exhibit 1
OPERATION SCHEDULE FOR THE FIRST YEAR
TYPE O F W ORK
YEAR 0 (IN M O NTHS)
7
8
9
10
11
YEAR 1 (IN M O NTHS)
12
1
2
3
4
5
6
Preparation
Preparation o f agreements to
purchase ra w inputs
Preparation o f agreement to
purchase equipment
Placing order f or package design
M arketing and product promotion
Preparation of Production Site
Completion o f architectural
redesign
Replacement o f electrical
and w ater systems
Assembly o f production line
Installation o f production line
Equipment and Supplies
Purchase o f trucks
O rder and delivery o f cardboard
boxes, oil, flavorings, etc.
Production Line
O rder
Delivery
Customs control
Delivery to production site
Human Resources
Hiring o f management and
technical personnel
Hiring o f drivers
Hiring o f production line w orkers
and other personnel
Arrival o f f oreign specialists
Training
Start o f production
Sale o f potato chips
45
CASE STUDIES
Exhibit 2
GENERAL INFORMATION
Project duration
Defects
10.5 years
5 %
Prices:
Potatoes (VAT not included)
Production cost (VAT not included)
$196/ton
$4,125/ton
Taxes:
Revenue tax
34 %
Tariff o f imported equipment
0.0 %
VAT on equipment
21.5 %
Equity investment in overall long-term
financing structure
86 %
Short-term credits
Interest rate
30 %
Term
7%
Required equity investment
46
$837,100
TROIKA POTATO CHIPS (A)
Exhibit 3
CAPITAL EXPENDITURES (in US$ thousands)
INITIATORS
INVESTOR
TOTAL
CO NSTRUCTIO N W ORK
Building and land
1) Completion o f architectural blueprints
2.5
0.0
2) Land and road improvement
3.0
0.0
3.0
3) Building renovation
21.3
0.0
21.3
4) W arehouse renovation
28.6
0.0
28.6
5) A dditional construction expenses
(heating, ventilation)
19.8
0.0
19.8
6) Total
75.2
0.0
75.2
7.5
0.0
7.5
17.8
0.0
17.8
100.5
0.0
100.5
7) Unexpected expenses (10 %)
8) VAT (21 % o f 6+7)
9) Total for construction
2.5
EQ UIPMENT
Storage
10) Sorting and control equipment
0.0
4.0
4.0
11) Dusting and spraying equipment
0.0
1.3
1.3
12) Total f or storage
0.0
5.3
5.3
Production Line
13) W asher
0.0
39.4
39.4
14) Cutter
0.0
107.2
107.2
15) Fryer
0.0
158.9
158.9
16) Heating unit
0.0
121.2
121.2
17) Control panel
0.0
52.0
52.0
18) Packaging equipment
0.0
152.0
152.0
19) Spare parts
0.0
42.2
42.2
20) Delivery and maintenance expense
0.0
50.3
50.3
21) Total f or production line
0.0
723.2
723.2
22) Total f or production and storage
equipment (21+12)
0.0
728.5
728.5
23) Tariff
0.0
0.0
0.0
24) Delivery from port to site
0.0
2.0
2.0
25) Total (22+24)
0.0
730.5
730.5
12.0
0.0
12.0
2.2
0.0
2.2
14.2
0.0
14.2
TRA NSPORT
26) Trucks (2)
27) Insurance (18 % o f cost)
28) Total for transport
OTHER EXPENDITURES
29) O ffice equipment
1.6
0.0
1.6
30) M aintenance and assembly f ees (3 months)
13.5
0.0
13.5
31) Total for other expenditures
15.1
0.0
15.1
32) Total (25+28+31)
29.3
730.5
759.8
2.9
73.1
76.0
33) Unexpected expenses (10 %)
34) Total for equipment (32+33)
32.2
803.6
835.7
35) VAT on domestic eq. (reimbursed
6 months from start o f operation)
6.9
0.0
6.9
36) VAT on imported equipment
(reimbursed at start o f operation)
0.0
172.8
172.8
132.7
803.6
936.2
GRAND TOTAL
47
CASE STUDIES
Exhibit 4
FIXED ASSET DEPRECIATION, INSURANCE, AND MAINTENANCE EXPENSE
ORIGIN AL PRICE
LIFETIME
IN YEARS
YEARLY DEPRECIATIO N
US$1,000
Building
%
SALVA GE VALUE
US$1,000
INSURA NCE
US$1,000
%
US$1,000
M AINTEN A NCE
%
US$1,000
100.5
40
2.5
2.5
75.4
1.7
1.7
2.0
2.0
32.2
10
10.0
3.2
0.0
1.7
0.5
5.0
1.6
equipment
803.6
10
10.0
80.4
0.0
1.7
13.7
5.0
40.2
Total
936.3
-
-
86.1
75.4
-
15.9
-
43.8
Russian
equipment
Imported
Exhibit 5
OPERATION PLAN
Number o f shif ts:
2
Number o f w ork days in a month:
20
Number o f hours in a shif t:
8
Number o f w ork months in a year:
10
YEAR
1
2
3
4
5
6
7
8
9
10
Total
First shift:
Number of months
10
10
10
10
10
10
10
10
10
10
100
Number o f w ork hours
160
160
160
160
160
160
160
160
160
160
1,600
0
0
0
0
0
0
0
0
0
0
0
Second shift
Number o f months
7
10
10
10
10
10
10
10
10
10
97
Number o f w ork hours
112
160
160
160
160
160
160
160
160
160
1,552
0
0
0
0
0
0
0
0
0
0
0
Work hours per year
272
320
320
320
320
320
320
320
320
320
3,152
0
Efficiency rate
Actual w ork hours per year
0
0
0
0
0
0
0
0
0
0
0.80
0.85
0.90
0.95
0.95
0.95
0.95
0.95
0.95
0.95
-
217
272
288
304
304
304
304
304
304
304
2,905
6
0
0
0
0
0
0
0
0
0
6
870
108
115
121
121
121
121
121
121
121
1,162
8
2
6
6
6
6
6
6
6
2
De f ects (5 % in tons)
218
272
288
304
304
304
304
304
304
304
2,906
Finished products net
11
14
14
15
15
15
15
15
15
15
145
207
258
274
289
289
289
289
289
289
289
2,760
854
106
113
119
119
119
119
119
119
119
1,139
4
0
2
2
2
2
2
2
2
2
Ra w potatoes (tons)
Finished goods (tons)
de f ects (tons)
Sales revenue — without
VAT at US$4,125 per ton
48
TROIKA POTATO CHIPS (A)
Exhibit 6
PRODUCTION COSTS
Variable costs f or producing 1 ton o f potato chips
(without defects)
Potatoes
Chemicals
O il
A dditives
Packaging material
Cardboard boxes
Electricity
Total
Variable costs f or producing 1 ton o f potato chips
(with 5% defect rate)
Variable costs f or producing at full capacity:
289 tons o f chips per year
(with 5% defect rate)
Fixed annual costs
Depreciation
M aintenance
Insurance
Utilities
W ater
Fuel
Salary
M anager
Accountant
M arketing director
M echanic/electric
A grarian specialist
W arehouse f oreman
Sorter
Sales person
Driver
M anual w orker (2 shif ts)
Production controller (2 shif ts)
Line operator
Packaging operator
A dditional w orkers (2 shif ts)
Total salary expense
Other fixed costs
A dvertising (first t w o years)
A dvertising (subsequent years)
Training (first year)
Transport maintenance
Total other fixed costs
First year
Second year
A f ter
Total fixed costs
First year
Second year
A f ter
A M O UNT
PRI C E P E R U N I T
W I T H O U T V A T,
U S$
T O T A L PRI C E
( W IT H O U T V AT)
U S$
4 tons
.25 liters
400 liters
20 kg
50 kg
200
800 k W
196
15
1.25
0.10
8
0.30
0.02
784
4
500
2
400
60
16
1,766
1,859
537,160
86,100
43,800
15,900
10,000 cubic meters
20,000 liters
0.01
0.15
100
3,000
1
1
1
1
1
1
2
1
1
2
2
2
2
4
3,600
3,000
3,000
2,160
2,160
1,920
1,680
1,800
1,700
1,440
1,680
1,800
1,800
1,440
3,600
3,000
3,000
2,160
2,160
1,920
3,360
1,800
1,700
2,880
3,360
3,600
3,600
5,760
41,900
2 trucks
15,000
25,000
7,500
1,550
15,000
25,000
7,500
3,100
25,600
18,100
28,100
216,400
208,900
218,900
Total operating expense at full capacity
First year
753,560
Second year
746,060
A f ter
756,060
49
CASE STUDIES
Exhibit 7
FINANCING (US$1,000)
YEARS
0
1
Total
961.8
-
961.8
188
-
188
Interest payment
-
14
14
Debt repayment
-
188
188
48
Investment
Short-term credit (3 months)
Short-term credit (4 months)
48
-
Interest payment
-
5
5
Debt repayment
-
48
48
1,197.8
(255)
942.8
Total
50
TROIKA POTATO CHIPS (A)
Exhibit 8
CASH FLOW PROJECTIONS (US$1,000)
YE A R
0
1
2
3
4
5
6
7
8
9
10
Total
854 1,064 1,130 1,192 1,192 1,192 1,192 1,192 1,192 1,192
11,392
REVENUES
Sales
0
Salvage value
0
0
0
0
0
0
0
0
0
0
75
75
Reimbursed VAT
0
180
0
0
0
0
0
0
0
0
0
180
Total
0 1,034 1,064 1,130 1,192 1,192 1,192 1,192 1,192 1,192 1,267
1,1647
EXPENSES
M anagement cost
43
0
0
0
0
0
0
0
0
0
0
43
Investment activities
936
0
0
0
0
0
0
0
0
0
0
936
VAT on equipment
180
0
0
0
0
0
0
0
0
0
0
180
O ther expenses
0
33
8
3
2
0
0
0
0
0
(46)
Variable costs
0
385
480
508
536
547
558
569
581
592
604
5,360
M aintenance (Exhibit 4)
0
44
44
45
45
46
46
47
47
48
49
461
Insurance (Exhibit 4)
0
16
15
14
13
12
11
10
9
8
7
115
Utilities
0
3
3
3
3
3
3
3
3
3
3
30
Salary
0
42
44
46
48
51
53
55
57
59
61
516
O ther fixed costs
0
26
18
28
28
28
28
28
28
28
28
268
Total production expense
0
516
604
644
673
687
699
712
725
738
752
6,750
Income tax
0
74
115
124
135
131
128
124
120
116
112
1,179
O ther taxes
0
29
31
31
31
29
28
26
25
23
22
275
1,159
652
758
802
841
847
855
862
870
877
840
9,363
Net income
(1,159)
382
306
328
351
345
338
330
322
315
427
2,284
Total be f ore financing
(1,159) (777) (472) (144)
207
552
889 1,219 1,542 1,857 2,284
-
Total expenses
Financing (Exhibit 7)
1206
(255)
0
0
0
0
0
0
0
0
0
0
951
351
345
338
330
322
315
Net income a f ter financing
47
127
306
328
427
3,235
Total a f ter financing
47
173
479
807 1,158 1,502 1,840 2,170 2,492 2,808 3,235
-
Dividend payments
0
123
219
236
257
250
243
235
228
221
212
2,224
Earnings a f ter dividends
47
4
86
92
93
95
95
95
95
95
215
1,011
Total
47
50
173
229
322
417
512
607
701
796 1,011
-
Repurchase o f pre f erred stock Type A
-
-
-
-
-
-
-
-
-
-
692
692
Repurchase o f pre f erred stock Type B
-
-
-
-
-
-
-
-
-
-
32
32
Remainder
287
51
CASE STUDIES
Exhibit 9
INCOME PROJECTIONS (US$1,000)
10
Total
0
854 1,064 1,130 1,192 1,192 1,192 1,192 1,192 1,192 1,192
1,1392
Variable cost
0
385
48
508
536
547
558
569
581
592
604
5,360
Depreciation
0
86
86
86
86
86
86
86
86
86
86
860
M aintenance
0
44
44
45
45
46
46
47
47
48
49
461
Insurance
0
16
15
14
13
12
11
10
9
8
7
115
Utilities
0
3
3
3
3
3
3
3
3
3
3
30
Salary
0
42
44
46
48
51
53
55
57
59
61
516
M anagement f ee
0
4
4
4
4
4
4
4
4
4
4
40
O ther fixed costs
0
26
18
28
28
28
28
28
28
28
28
268
Total expenses
0
606
694
734
763
777
789
802
815
828
842
7,650
Earnings be f ore interest and taxes
0
284
370
396
429
415
403
390
377
364
350
3,742
11
12
12
12
12
12
12
12
12
115
YEARS
0
Sales revenue
1
2
3
4
5
6
7
8
9
Expenses:
Taxes:
Building and property tax
0
Tax on advertising
0
1
1
2
2
2
2
2
2
2
2
18
Road tax
0
3
4
5
5
5
5
5
5
5
5
47
Asset tax
0
16
15
13
10
10
9
7
6
4
3
95
Total tax
0
29
31
31
29
29
28
26
25
23
22
275
Income be f ore taxes
0
219
339
365
398
386
375
364
352
341
328
3,467
Income tax
0
74
115
124
135
131
128
124
120
116
112
1,179
Income a f ter taxes
0
145
224
241
263
255
248
240
232
225
216
2,288
Interest expense
0
19
0
0
0
0
0
0
0
0
0
19
Income a f ter taxes and interest
0
126
224
241
263
255
248
240
232
225
216
2,269
(2 % o f revenue)
0
3
4
5
5
5
5
5
5
5
4
45
Dividend payments -Type A
0
123
219
236
257
162
160
160
160
160
160
1,798
Dividend payments -Type B
0
0
0
0
0
7
9
9
9
9
9
52
Dividend payments - common
0
0
0
0
0
81
74
66
59
52
43
374
Total dividend payments
0
123
219
236
257
250
243
235
228
221
212
2,224
Retained earnings
0
0
0
0
0
0
0
0
0
0
0
0
Contribution to a reserve f und
52
Purchase answer to see full
attachment