Group

Participants: Artemyeva Olga, Trunova Olga, Nefed Katya, Namis Ilya, Georgiev Yordan
Team manager: Artemyeva Olga
Line of business: leasing company
Name of the Company: RusNova Leasing


2

Introduction
Leasing is a process by which a firm can obtain the use of a certain fixed assets for which it must
pay a series of contractual, periodic, tax deductible payments.
The lessee is the receiver of the services or the assets under the lease contract and the lessor is the
owner of the assets. The relationship between the tenant and the landlord is called a tenancy, and
can be for a fixed or an indefinite period of time (called the term of the lease). The consideration
for the lease is called rent.
Leasing is quite popular in Russia, because it helps companies to reduce moment costs,
allowing to make regular payments but use the subject of leasing. The most popular type of
leasing is transport leasing, it is becoming more and more popular nowadays (according to the
survey of top managers of leasing companies at the conference Leasing in Russia-2013).
However, our team has become interested in agricultural leasing due to the fact that agriculture is
40% of national output (Rosstat 2013) and is incredible part of our economy.
The object of the project is financial leasing.


3

Preliminary business description
We are going to start up a leasing company RusNova Leasing, which will deal with
landowners. Our core activity is financial leasing, but if our business is sound, we are going to
diversify our service. We believe that farming is a perspective branch of Russian economy
nowadays, as it is being developed thoroughly and supported by Russian government.
We are going to lease farming machinery and equipment, for that we are going to make a
search on how a certain region depends on farming and according to that we will be able to
conclude frames.
We are going to start up as a private company with 5 shareholders in total Olga Artemyeva,
Olga Trunova, Ilya Namis, Yordan Georgiev, Katya Nefed. The same people will be the Board of
Directors.
At the same time there are three main branches of farming in Russia (that we consider to be
the most important ones):
1. Cattle breeding and/or planting
2. Dwelling for farmers
Using word dwelling we mean that we lease buildings with special farming equipment
where farmers can live and work (like complex). Another idea, which we have as further strategy,
is to buy out old factories, restore them and lease to large companies (we expect to diversify
every 2 years).
Experts note that currently the farm products market is at an early stage of development.
Partially the development of this area has been contributed by the promotion of the ideas of
environmental products and, as a result, consumer concern with this issue. At the same time, the
market share is extremely low, as Russian consumer prefers ready-made meals that are more
marginable for retailers.
The most popular farm goods are dairy products, cheese and chilled meat (to a less extent).
Experts consider the segment of dairy and dairy products to be the most promising one, due to the
traditional habits of Russian consumers. That is why we believe it is important to help farmers do
their business. The more farmers are on the market, the higher competition will be, and as a result
4

prices for farm products will go down. This will cause the satisfaction of consumers and their
willingness to buy more. Increased expenditures of consumers will relevantly cause increase in
entrepreneurial initiative to produce more, and here our leasing company will help start-up
farmers to do their business.
As for planting, about 79% of tractors and more than 60% combines, working on Russian
fields have expired operation. This negatively affects the volume of harvest. To control the
situation, a certain kind of support should be made towards domestic producers. As we are going
to cooperate only with Russian producers, we may be of some help to the above mentioned
problem. Being financed with our orders, Russian producers are stimulated to produce more
resulting not only to the refreshment of the machinery park, but also influencing GDP.
The average leasing complex includes two tractors and seeding equipment.
In future, we expect diversification and imply new service dwelling for farmers. We are
going to buy out buildings, restore them and create farmer complexes not far from their localities.
These complexes can be used by farmers co-operatives, thus making their relationship easier.

Preliminary market activities
1) To start a market campaign in order to give publicity to our company
2) To purchase agricultural equipment that will be leased
3) To make orders with pre-payment on discount terms (as first clients) that will give us an
additional source of money
4) To move towards activity in full swing





5

Environmental Analysis
1. Why agricultural equipment?
The equipment leasing has been growing fast during the last decade, especially the segment
of transport equipment leasing. This is why this segment is extremely saturated (according to the
statistics 10 companies own 60% of the whole market). However, the other segments, agricultural
in particular, are only developing now. We are interested in agriculture as it is considered to be
one of the most perspective in the world according to both Russian and foreign analytics. In
addition, great government support is given to farmers. On the chart below you can see the
expectations of development of agricultural machinery market up to 2020: tractors, harvesting
machinery and others respectively.

As our office is situated in Moscow, we are going to penetrate in Central Federal District,
Privolghsky Federal District and Far East Federal District of Russia because of the following
reasons:
The first two are considered to have the most fertile (agriculturally productive);
6

The Far East Federal District suffered flood last year, and many farmers suffered from it,
obviously. Now they urgently need fast recovery from the nature disaster and are going to
double the harvest this year to cover the gap.
Still, there is a range of questions we have to deal with. First of all, logistics. According to the
standards, farming machinery is considered to be bulky goods of non-standard size, that is why
the price for taking the machinery is 80-100 RUR per 1 km at least, the final price depends on the
particular company, their terms, machinery proportions etc. We consider hiring a company to be
rather costly and the most obvious way for us to transfer machinery to Far East is by train. In
future we are thinking of a creation of a car park, but it requires LT growth and a good market
share. Another question is controlling the quality of service in Regions. We suppose to open
offices there with 1-2 employees who will be responsible for the sound management there. We
are planning to make a business trip every 3 month as a check of that activity (at the first stage).
There is a risk of withdrawing the contract (our operational risk), as a result of which our assets
equipment in particular will be frozen. To prevent that, we are going to set a certain
percentage of the whole order value as a financial guarantee. The size of the guarantee depends
from contract to contract considering the order volume.
We are going to work with farmers of small volume of production, as it is very difficult to
start and compete with large companies. This is why these farmers are united in cooperation. As a
result there is possibility of gaining huge client base after attracting only one client.
Competition
We consider two branches of competition: internal (leasing companies) and external (out
of leasing industry).

INTERNAL EXTERNAL
Most companies engaged in other types
of leasing, so there is possibility to gain
good market share (even leasing giants
have small revenue from agricultural
There are a lot of companies in the
districts mentioned above which produce
agricultural equipment. Names of both
Russian and foreign competitors
7

equipment). Competitors:
o ROSAGROLEASING
o LEASINGAGRO
o UTEK
o AKKOR-LEASING
supplying Russian farmers in mentioned
regions:
o CLAAS-Germany
o Gomselmash- Belarus
o CNH
o AGCO
o SAREKS, OAO
o ELABUGHSKY
AVTOMOBILNY ZAVOD,
OAO
o ALTAYSKY TRAKTOR, OAO
o Etc. (see chart below)




8

SWOT analysis
Strength Weakness
The realization of the program
The development of agricultural
industry and regulation of
agricultural markets for 2013-
2020
The improvement of quality and
competition of products with
modernization of production
The impose of new technologies
in agricultural business
Due to small operation volume
our company will be able to give
leasing services quickly, while big
leasing companies need a lot of
time to make decision concerning
farmers inquiries.

High percentage of agricultural
businesses which suffer losses
The poor development of services
markets infrastructure
Due to small operation volume we
will not be able to maintain
economy of scale (small volume
of serving gives higher COGS, as
fixed costs are spread for less
units) in the beginning
Opportunity Threats
Higher volume of production
which leads to more clients
The higher investments in leasing
Planned diversification
New possibilities for farmers to
recover after flood of 2013 (if we
speak about Far East)

Seasonal business
The great impact of natural
factors (for example, weather)
Macroeconomic fluctuations
Possibility of hostile takeover (by
giants)
low level of consumers trust in
start-ups


9

PESTEL-analysis
Macroanalysis
Factor Possibilities Threats
Political Governmental
support of leasing
(funding,
guarantees,
subsidies)
Governmental
support of small
businesses
Loyalty of
government to
leasing activity
Absence of stable
law on leasing
development
Leasing ban
Economic The potential
economic growth
(ROSSTAT 2013)
Investment growth
The development
of credit-financial
markets, decrease
on interest rates
Saturated leasing
market that leads to
mandatory
improvement in
leasing quality
Law economic
growth pace
Possible crisis
Legal Loyal policy to
leasing companies
(concerning initial
The fast
amortization ban
10

capital, etc)
Absence of
demand in uniform
financial repost

Microanalysis
Factor Possibility Threat
Overall analysis Dynamic growth of
leasing
Potential of growth
in comparison with
the USA and the
EU
Positive forecast of
development for
future 5 years

Macroeconomic
factors
Clients Big amount of
potential clients
Financial disability of
clients
Competition Possible monopoly
or oligopoly
Differentiation of
services
Concentration of
business
The high activity of
competitors
Competitors In SR small amount of
arising competitors
Easy penetration to the
market can cause new
competitors
Suppliers and partners Alternative to
credit
The enlargement of
Bank conservatism
Transportation cost
The demand-supply
11

strategic
possibilities
Good suppliers
network
relationship
Substitutes High benefits of leasing
products to other credit
products.
Advantages of leasing
product in terms of price
and quality.
Increasingly attractive
banking products,
commercial loans, issue its
own securities.

Supply and demand
As for supply and demand, the following facts should be taken into account: our business
is seasonal (due to the nature of agricultural business).
Demand for agricultural machinery in Russia is determined by two factors: the key drivers
of demand and macro factors.
Macrofactors include:
1. Development of agriculture in Russia:
rise in prices of agricultural products ;
income growth and the associated change in the structure of nutrition (in favor of
meat products);
direct government support to domestic / agricultural enterprises (subsidies,
payment of the costs of seed, fertilizer , fuel) ;
creation of conditions for the growth of exports of agricultural products (
infrastructure, lobbying interests of domestic producers) .
2. State support for agricultural engineering:
financial services to domestic producers of agricultural machinery (preferential
loans, interest rate subsidies, etc.).
12

Drivers of demand for agricultural machinery are: updating the existing fleet of
agricultural equipment.
A significant proportion of agricultural machinery market is owned by foreign suppliers.
Accelerated import growth, a steady increase in the proportion of foreign agricultural products in
total sales over the past 5 years indicate the apparent trend of repression by foreign suppliers
towards Russian companies on domestic market. On the table below one can trace the change in
import share in period 2010 2013. (increase from 13.9 % up to 32%)




There are four main factors that contribute to the strengthening of importers positions on the
domestic market:
undeveloped agricultural own supply of equipment on the Russian market;
preferential policies of the state in the field of taxation and customs and tariff
regulations. In practice, the tax authorities require one of the following documents:
Confirmation of payment of customs duties and taxes (an official letter of
02.10.2009 N 03-07-08/198) and the report on the expenditure of funds paid as
advance payments, which is issued in accordance with paragraph 4 of Art. 330 of
the Customs Code (letter from the Russian Ministry of Finance 30.06.2008 N 03-
07-08/159). In case of their absence the organization refused to deduct "customs"
VAT. Nevertheless, taxpayers are able to defend their right to deduct in the courts.
13

The proof is, for example, Resolution of the Federal District of the Moscow
19.06.2008 N KA-A40/4995-08. In this judgment, the Court stated: "Getting from
the customs authority report on the expenditure of funds paid as advance payments
, is a right, not an obligation of the taxpayer , in connection with the missing of
report and seal on this document cannot be grounds to withhold the tax
deduction." In most cases, customs officers affix on the back of " advance "
payment order special notes : indicate the number of GTE derive cash balance and
certify this record personal numbered seal . Such actions by customs officers
carried out on the basis of paragraph 2 of the Rules of customs control for the
calculation and payment of customs duties in customs clearance of goods
(approved by Order of the State Customs Committee of Russia from 04.01.1995 N
2).
shortcomings of Russian customs and tax legislation. In accordance with
paragraph 1 of Article 252 of the Tax Code for income tax purposes the taxpayer
reduces the income for the amount of costs incurred, which are recognized as
reasonable and documented expenses ( in the cases under Art . 265 of the Tax
Code - losses) carried out ( incurred ) by the taxpayer .
aggressive marketing policy of importers for selling


14

Organizational Structure and Organization of Financial Activity
One of the most important aspects of any company organization is its organizational
structure. The most convenient type of a leasing company organization structure is a hierarchy
which allows constructing a clear scheme of responsibility distribution. In this way, the main
control of our companys business activity is realized by the Board of Directors (that is the Board
of Company Founders) which in the presented organizational structure scheme (see Figure 1) is
placed above all other company structure elements.
On the next level of the presented scheme you may see five general activity elements of
any leasing company:
1. Main Offices (HR and Inspection Offices, etc.);
2. Legal Department;
3. Company Administration which includes Accounting Office (with the cooperation with
the Financial Department), Chancellery and Treasury;
4. Commercial Management
5. Examining Projects Office.
The internal division of the Commercial Management includes the Department of the
Internal Market with its branches, the Department of the External Market with its branches and
the Advertising Department
The more precise division may reveal the existence of such offices as the Office of the
Machinery and Spare Parts Sales and the Office of the After-Sales Service.
The whole composition of our companys organization structure you may observe looking
at the scheme below;
Here we will explain the functions of some of the departments.
1) Finance department
The finance department plays a huge role in business because that's where the money is.
The finance department knows how much money is needed to pay vendors, secure clients, cover
bills and pay employees. This department is also in charge of filing taxes, keeping up with the
current value of assets, and knowing how much cash flow the company has at any given time.
Anything involving money passes through the finance department. In a large company,
there may be more than one department under the larger umbrella of the finance department such
as payroll, accounts payable, accounts receivable and sales. The payroll department keeps track
15

of employee hours worked, sets current salary or hourly rates, manages vacation and sick leave
time, adheres to current tax laws and cuts checks for employees. The accounts payable
department receives invoices from vendors and contract employees, matches them to inventory or
receipts and enters them into the system for payment. This department also cuts and mails checks
for payables other than payroll. The accounts receivable department receives payments and
makes sure that they are accurately entered into the system. Many finance departments also have
a financial forecasting segment that studies market trends to help determine how much money the
company can expect to make from current and future ventures.
2) Accounting office.
Typically, the accounting department is responsible for the following:
Payroll: The total wages and salaries earned by every employee every pay period, which are
called gross wages or gross earnings, have to be calculated. Based on detailed private
information in personnel files and earnings-to-date information, the correct amounts of
income tax, social security tax, and other deductions from gross wages have to be
determined.
Stubs, which report various information to employees each pay period, have to be attached to
payroll checks. The total amounts of withheld income tax and social security taxes, plus the
employment taxes imposed on the employer, have to be paid to federal and state government
agencies on time. Retirement, vacation, sick pay, and other benefits earned by the employees
have to be updated every pay period.
In short, payroll is a complex and critical function that the accounting department performs.
Many businesses outsource payroll functions to companies that specialize in this area.
Cash collections: All cash received from sales and from all other sources has to be carefully
identified and recorded, not only in the cash account but also in the appropriate account for
the source of the cash received. The accounting department makes sure that the cash is
deposited in the appropriate checking accounts of the business and that an adequate amount
of coin and currency is kept on hand for making change for customers.
Accountants balance the checkbook of the business and control who has access to incoming
cash receipts. (In larger organizations, the treasurer may be responsible for some of
these cash-flow and cash-handling functions.)
16

Cash payments (disbursements): In addition to payroll checks, a business writes many
other checks during the course of a year to pay for a wide variety of purchases, to pay
property taxes, to pay on loans, and to distribute some of its profit to the owners of the
business.
The accounting department prepares all these checks for the signatures of the business
officers who are authorized to sign checks. The accounting department keeps all the
supporting business documents and files to know when the checks should be paid, makes
sure that the amount to be paid is correct, and forwards the checks for signature.
Procurement and inventory: Accounting departments usually are responsible for keeping
track of all purchase orders that have been placed for inventory (products to be sold by the
business) and all other assets and services that the business buys from postage to forklifts.
A typical business makes many purchases during the course of a year, many of them on
credit, which means that the items bought are received today but paid for later. So this area
of responsibility includes keeping files on all liabilities that arise from purchases on credit so
that cash payments can be processed on time.
The accounting department also keeps detailed records on all products held for sale by the
business and, when the products are sold, records the cost of the goods sold.
Property accounting: A typical business owns many substantial long-term assets called
property, plant, and equipment including office furniture and equipment, retail display
cabinets, computers, machinery and tools, vehicles (autos and trucks), buildings, and land.
Except for small-cost items, such as screwdrivers and pencil sharpeners, a business maintains
detailed records of its property, both for controlling the use of the assets and for determining
personal property and real estate taxes. The accounting department keeps these records.
The accounting department may be assigned other functions as well, but this list gives you a
pretty clear idea of the back-office functions that the accounting department performs. Quite
literally, a busineass could not operate if the accounting department did not do these functions
efficiently and on time. To do these back-office functions well, the accounting department must
design a good bookkeeping system and make sure that it is accurate, complete, and timely.
3) Legal Department
17

The legal department of a business handles legal issues that may come up in the course of
business, ranging from drafting waiver forms for employees to handling lawsuits from angry
customers. Many large companies have this type of department; smaller companies may choose
to keep a lawyer or a staff of lawyers on retainer, ensuring that they have quick access to legal
knowledge when they need it. Customers can often find themselves interacting with the
department, especially when they file complaints or indicate that they believe a business is not
operating within the law.
Members of the legal department are typically trained and qualified lawyers, along with a
support staff of legal assistants and other law professionals. Ideally, the department focuses only
on tasks that require a trained lawyer; in other words, employees may look over a letter from an
executive to ensure that it will not cause problems in the future, but they will not draft letters for
members of the company, unless the letters pertain to legal matters.
One of the most important roles for employees in this department is as legal advisers.
Before marketing a new product, staff members will often discuss it with the lawyers. Executives
may talk with the staff about potential legal issues ranging from being accused of discrimination
in hiring practices to sexual harassment. The department may also offer training and assistance
with employee manuals to ensure that the company and its employees are kept up to date on
workplace law, reducing the risk of potential suits.
The legal department will also become involved in customer complaints, ensuring that the
responses to these complaints are drafted in a professional style that also covers the company's
bases legally. In the event that a company is sued, either from within or from the outside, the
department will represent the company in the suit. It also handles the filing of patents and other
legal documents with official agencies.
In a large, multi-national company, the legal department can be massive, approaching the
size of a large law firm. The lawyers may come from different nations and have different training
backgrounds, ensuring that every aspect of the company's business is covered, from a
manufacturing plant in England to a bank in India. The staff members may also work together on
deals, using their years of experience to vet proposals and documents, ensuring that the company
is getting the best legal representation and advice possible.

18













F







19

Financial structure
The second important aspect of a companys organization is its financial structure which
reveals the peculiarities of the financial responsibility distribution inside a business. The below
table (see Table 1) shows the main responsibility centers which coincide with the existing capital
flows inside our company. Also here you may observe the importance level of each particular
capital flow and analyze its significance for the scale of our business.
There is a table:

Characteristics
Fixed
Costs
Management
Costs
Revenue
Center
Indicators
controlled by
the
administration
Production
costs per
volume of
goods (works,
services)


Costs

Marginal
Revenue
Indicators
controlled by
the central
control unit
Volume and
structure of the
products
Operating
budget
Operating
budget
Example of
Departments
1)Main Offices
2)Examining
Projects
Office

1)Legal
Department
2)Company
Administration
3)Commercial
Management
4)Advertising
Department

1)Department
of the Internal
Market
2)Department
of the External
Market
3)Office of the
Machinery and
Spare Parts
Sales
4)Office of the
After-Sales
Service.
20

Internal marketing department
With an internal marketing strategy, employees are treated as internal customers who
must be convinced of a company's vision and worth just as aggressively as external customers.
The goal of internal marketing is to align every aspect of a companys internal operations to
ensure they are as capable as possible of providing value to customers. If a company can operate
in a coordinated and standardized way, that company can provide a more consistent experience to
their customers.
Internal marketing is based on the idea that customers attitudes toward a company are
based on their entire experience with that company, and not just their experience with the
companys products. Any time a customer interacts with an employee, it affects their overall
satisfaction. Everyone from a sales clerk to an over-the-phone tech support specialist helps to
shape that customer's experience. Therefore, customer satisfaction is deeply dependent on the
performance of a company's staff
The main function of the internal marketing department involves creating persuasive and
informative messages that resonate with every department and employee within a company.

External marketing
External marketing includes all the activities which enable an organization to satisfy the
needs and wants of the customer. The quality of the interaction between seller and buyer will
determine marketing success, but this will often depend upon individual contacts between
employees of the organization and current or prospective customers, or interactive marketing as it
is known.

Customers might soon be lost (or might never be gained in the first place) if such contacts
between company and consumer are unproductive, for whatever reason. So a marketing
orientated organization will try to ensure that interactions with customers are appropriate and
positive. This does not just apply to sales people initial contact often involves call centers or
receptionists, whose manner, appearance and skills of communication can either encourage or
dissuade a customer seeking further dealings with the company.


21

Source of money
As we mentioned above we all are the stockholders of our company, that is why we are
primary investors. We are planning to have an initial capital of 4,5 million RUR ( 0,9 mln RUR is
a part held by one person). At the same time, we are going to ask for a subsidy from Government,
in amount of 0,5 mln RUR. We also plan to take a loan from Sberbank in terms of special
program which is initiated by the Russian Federation Central Government and which is directed
to the help to small businesses in Russia. This long-run program allows a small firm to take a big
sum loan and to repay it using the simple interest formula. The nuance of this financial campaign
is concluded in the potential ability of the bank to take part in the company management after the
period of repayment. The conditions of any loan provided by the program are the following: 1)
the sum of a loan is not less than 35 mln. rub.; 2) the credit period is not less than 10 years; 3)
depending on the repayment period the interest may be from 10% to 15% annually. Analyzed
presented conditions our firm decided to take a loan of 75 mln. rub. for 15 years with the offered
interest of 12% annually. (The repayment sum for the first operating year (2015) is presented in
the Income Projections Statement by the line Bank Charges.)

22

Business Strategy
The aim: the creation of the leasing company in order to attract long-term investments in
agricultural industry.
Strategy: to reach about 17% growth in leasing capital in 5 years.
We position ourselves as profit-oriented company.
The whole business strategy can be divided in 4 different stages.

Stage 1.(0-2 years)
We are starting up a leasing company, which will deal with landowners. Our core activity is
financial leasing.
The main branch is planting equipment for small farmers in Central, Privolzhsky and Far East
Federal regions for the reason mentioned already.
We are going to buy more used equipment (only with long amortization period (more than 10
years)) in the beginning. It is done to save our costs and, thus, have more chances to penetrate
new market. The equipment will be given for 3 years and after this period and final payment will
become the property of leaser. The small part of our equipment for leasing nevertheless will be
new (exact amount of equipment and money spend on both types are given in investing strategy).
We expect payments to be monthly payments even though our business is seasonal.

Stage 2. (2-4 years)
For effective work and development of RusNova in fast changing market conditions, the
strategy should be added and changes in some ways. It is obvious, that we expect about 7%
growth and thus to attract more clients we are going to spend more on advertising. The biggest
emphasis will be on promotion in agricultural magazines and on agricultural sites. We will
demand 10% of the whole sum as prepayment as guarantee and to eliminate our risks of losing
clients and equipment. On the second stage more new equipment will be bought to reach medium
23

sized farmers. Then practice of prepayment will possibly appear due to bigger size of leasing
cases. We also expect the system of discounts for regular clients appear to stimulate them using
our leasing services. Concerning the system of discounts, we are going to introduce the system of
scoring. It is special software which contains features of creditworthy company (to our minds). In
accordance with this system, creditworthy companies will be given discounts. The features will
be defined on this particular stage of our business development.

Stage 3. (4-6 years of operation)
At this stage we are planning to increase our leasing assets as well. However, we found
this time appropriate to begin diversifying our portfolio and come to purchasing of buildings
(such as warehouses) for farmers. These buildings will help the farmers to cooperate The service
is called Farmers Dwelling. We are going to buy equipment and machinery from Russian and
Belorussian (may be Ukranian) companies for several reasons. First of all, we start up in Russia.
Secondly, buying from Russian companies, we influence overall GDP and the willingness of
companies to produce for us in large batches, as we are their clients and they get profit from us.
Thirdly, it is cheaper, as we do not have to pay any custom tariffs and international transportation
costs*. In addition, we are going to provide customers with return leasing service. It means that
we will repurchase their equipment before the end of the contract and sell them the same leasers.
That will help the farmers to save money if they face some financial problems. And of course this
type of leasing can attract more clients.

Stage 4.
The expansion and diversification at Stage 3 should give us more profit and possible
money to reinvest. Thus, the other diversification of portfolio can take place: we are going to buy
old factories, fix them and give for leasing. Of course, it will demand new promotion approach.
The advertising can be now even on TV channels of regions of our operation, newspapers,
magazines, etc. At this stage we will be ready to receive also from equipment-leasing
24

customers seasonal payments, as they sometimes face problems in non-agricultural seasons
(winter) (we hope that the scale of our business will give us opportunity to do that).

*All the equipment will be bought from Russian or Belorussian producers



25

Investment Strategy
RusNova Leasing is a leasing company that operates in agricultural segment one of the
most perspective segments in Russia.
To have a sound business for many years in future, taking into consideration ever
changing market conditions, we are going to broaden the standard set of services offered. As a
result we are going to enlarge the accepted Development Strategy due to the investment activity
by the planned period 2014 2024.
Our basic way of development is project way and it helps RusNova Leasing to use
sources of funds that are actually inappropriate in traditional leasing model. Among them:
RusNova equity
Credits
Funding from Federal and Regional Budgets

New sources of funding:
Project funding
Government/state guarantees
Other sources

It is planned to expand leasing capacity up by 3% during the first year, by 5% more
during the following 4 years and 8% more during the following 5 years, thus resulting in 16,8%
expansion.

Projects examples. Partial list.
1) The enlargement of agricultural second hand machinery park
2) The purchase of newly manufactured agricultural machinery.
3) The purchase of buildings for farmers
4) The purchase of factories.
26

Preliminary Description

1) The enlargement of agricultural second hand machinery park
According to state standards, large agricultural machinery (harvesting machines, in
particular) can be exploited during 10 years with a norm of 3200 hectares per 1 machinery
unit in total. As RusNova Leasing is oriented to the small business (small size farmers), it
would be rather costly for them to buy new machinery and pay larger sums as a
depreciation if they cultivate less the accepted norm.
RusNova Leasing is going to buy out 3-4 years old machinery and then give it on leasing
terms for 3 years (according to the Federal Law 163-3 concerning small size
business) with a payment each 2 months. (In future the possibility of seasonal payments is
considered as a LT strategy)


2) The purchase of newly manufactured machinery
Oriented for medium size farmers. The creation of an agricultural machinery park will
give the opportunity to lead business in larger scale, without possible reduction of
clients request. Still, RusNova is planning to have 45% of new machinery; the other
55% will go for the second hand machinery.

3) The purchase of buildings for farmers
As RusNova is going to diversify its service every 2 years, we are planning to create a
special offer Farming Dwelling. We are going to buy out buildings and restore them for
farmers purposes, thus helping to create cooperatives between them. As predominantly,
farmers are 40 years old people, they still remember the Soviet Union times, when
farming was a normal practice. At the same time RusNova is going to offer discounts if
farmers use its service searching for machinery. We are going to increase our loan by 20
millions and get money saved from reinvestment (10-15 mln appr). Plus investors should
be attracted on the basis of the share from the line.

4) The purchase of factories
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The idea of the stage is to invest in old factories, fixing them if necessary and then give
for leasing (diversifying our portfolio). As we will have enough money from our business
to reinvest in new lines of business. Out expectations are to gain 30% of profit from this
field as we expect to be successful one, giving farmers ability to implement to develop
and grow, implementing more types of agricultural jobs than earlier (for example, not
only planting, but the production of food with long maturity date, which can be brought
even on mass production in future). For this investors and money for reinvestment should
be used.

Income Projections
INCOME PROJECTION FOR 2015 PERIOD

SALES 52.800.000
COGS (48.000.000)
GROSS PROFIT 4.800.000

OTHER INCOME: -
RENT RECEIVED -
INTEREST RECEIVED -

OTHER EXPENSES: (4.180.130)
SALARIES 1.680.000
INTERNET / PHONE 15.000
UTILITY BILLS 12.000
PROPERTY TAXES 288.000
INSURANCE -
AD COSTS 300.000
STATIONERY 25.000
BANK CHARGES 900.130
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TAX EXPENSE 960.000

NET PROFIT 619.870
All figures are presented in terms of Russian rubles

For the period of 2015 the projected sales revenue will be approximately 52.8 mln. rub.
This figure is calculated using the average leasing complex (which includes two tractors of 1 mln.
rub. and seeding equipment of 1.5 mln. rub.) price of 2.5 mln. rub., the average rise in price
percentage of 15%, the average leasing period of 5 years and the final redemption price which
appears to be 1% of 2.5 mln. rub.
The above calculation may be presented in the following form: 2.500.000 * 15% * 5 +
2.500.000 + 2.500.000 * 1% = 4.400.000 rub. This figure is to be divided by 5 (to get the annual
revenue per one complex) and multiplied by 60 (the amount of leasing complexes purchased
using the initial capital and then leased). The result will be 52.8 mln. rub.

The projected figure of the COGS (which is 48 mln. rub.) is calculated using the average
supplier price of one complex (two tractors and seeding equipment) which is 800.000 rub.
(including supply and delivery) and the projected amount of complexes bought using the initial
capital which is 60: 800 thousands rub. * 60 complexes = 48.000.000 rub.

In this way, the projected gross profit will be 52.8 mln. rub. 48 mln. rub. = 4.8 mln. rub.

For the period of 2015 the other incomes of our company have not been planned in
accordance with our primary goal which is concluded in the desire to enter the market operating
in a core sphere of our activity providing leasing services mainly to farmers.

For the described period the projected salaries for our employees will be about 1.680.000
rub. (7.000 rub. per month for each employee the amount of which is 20 people; the salary
amount coincides with the average regional salary and is considered acceptable for the observed
regions). For the internet / phone and utility bills the average figures will be about 15.000 rub.
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(650 rub. per month for the internet and 600 rub. per month for the phone) and 12.000 rub. (1
thousand rub. per month for the utility services) respectively.

The regional property tax is about 6% and, in this way, the projected property tax amount
for our company in the described period of 2015 will be about 4.8 mln. rub. * 6% = 288.000 rub.

As in the period of 2015 our company plans to dedicate most of its time and money to its
main operational and organizational activity (about half of the year will be spent on the opening
process) it was considered not to pay for the insurance in the year 2015 and to cover this need
only in the year 2016.

The projected sum which will be spent on ad campaign is 300.000 rub. and it will cover
the promotion of the company in all three regions of our location. The bank charges which are to
be paid in the period of 2015 are about 900.130 rub. and they are calculated as 75 mln. rub. *
12% (the settlement period is 15 years). As the profit tax rate for the legal entity in the Russian
Federation is 20% the tax expense in the described period is to be 960.000 rub.

It is worth noting that in the above projection statement only the cost of the current
stationery (which includes paper, writing utensils, etc.) is mentioned and it is about 25.000 rub.
The other office devices such as computers, laptops, etc. are to be bought using the initial capital
and that is why the projected information about spending on them is not represented above.

Finally for the period of 2015 the projected net profit of our company will be about
619.870 rub. It will be enough to cover the current company needs and to continue the operation.
The next period projection will demonstrate the more positive results as we plan to occupy a
niche of a small leasing business and to reduce the company expansion process (in order to
accumulate capital for reinvestment).

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Conclusion
To sum up all mentioned above, RusNova Leasing is a start up company operating in
agricultural equipment leasing. Considered analysis of business environment, competition,
possible abilities for growth cannot prevent the company from becoming strong, big and stable. If
there is no great impact of macroeconomic factors the company can expect growth of 17% in 10
years.

This project helped every team-member to understand how financial and marketing
analyses are done and what norms and legal acts the entrepreneurs should follow to create
successful company.





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Bibliography
1) Federal Laws http://www.minfin.ru/ru/
2) Leasing: basis of theory and practice Shabashev V.A.
3) http://agromagazine.msau.ru/ru
4) http://www.nalog.ru/rn77/ Federal Tax Service
5) http://www.customs.ru/ Federal Customs Service
6) http://www.sberbank.ru/moscow/ru/s_m_business
7) Civil Code of Russian Federation
8) Russian market of agricultural machinery, issue 3