Ukrainian enterprises’ strategy for attracting foreign investments (LLC "UKRAGRO“ taken as an example)

by Ievheniy Lutsyk

Scientific supervisor: D. in Ec. Serhii V. Kuzminov

The structure of the diploma paper

• CHAPTER 1.THEORETICAL AND METHODOLOGICAL ASPECTS OF FOREIGN DIRECT INVESTMENT

• CHAPTER 2. THE ANALYSIS OF TRENDS AND THE EFFECTIVENESS OF INVESTMENT IN AGRICULTURAL ENTERPRISE

• CHAPTER 3. DEVELOPMENT OF STRATEGY FOR ATTRACTING FOREIGN INVESTMENTS INTO LLC "UKRAGRO"

The objective of the research : the analysis of Ukrainian companies’ strategy in attracting foreign investments into agriculture.

Research tasks:• to determine the economic essence of foreign direct investment (FDI), its types,

forms and peculiarities of effect;

• to analyze the modern scientific methodological approaches to determining the efficiency of FDI;

• to consider international practice of using FDI in agriculture;

• to analyze the state of foreign direct investment in agriculture of Ukraine;

• to make a general characteristic of the enterprise;

• to evaluate the financial state of the enterprise;

• to analyze the investment attractiveness of the enterprise;

• to justify organizational form of foreign investments attraction;

• to make up an investment project;

• to evaluate the economic efficiency of the project.The research object: the LLC agricultural firm "Ukragro".Subject of research: is the attraction of foreign investments in agriculture of

Ukraine.

The findings obtained in the theoretical section• Foreign direct investment is an investment in which an investor

resident in one country (donor country) places its assets in another country (the host country), subject to receipt (conservation) of control over these assets.

• Foreign investors when investing direct capital in another country, have the right of ownership to the enterprise invested and, accordingly, the right of control over its production activities and distribution of products.

• Analysis of foreign direct investment in agriculture of Ukraine testifies to their small volume. According to specialists, the investment required for this sector of the economy is about 7 billion USD.

• The small volume of FDI in agricultural production of Ukraine is explained, first of all, by the peculiarities of the investment process in this field. Agriculture is too risky sector for investments, because it is influenced by a variety of exogenous factors that man is hardly able to control (natural disasters, epidemics, pests and diseases of agricultural plants and animals).

Dynamics of LLC "Ukragro" production in 2011-2013

0

200

400

600

800

1000

1200

1400

Зерно Мука Яловичина Овочі (свіжі та консервовані)

Свинина Копченості Мед

тис. грн.

2011 рік 2012 рік 2013 рік

Grain Flour Beef Vegetables Pork Sausage Honey

thousand UAH

FactorOptimal

value2011 2012 2013

Deviation (+,-)

2012/2011

2013/2012

2013/2011

 

The absolute liquidity ratio 0,25-0,3 0,018 0,009 0,055 -0,009 0,002 0,046  

The quick ratio 0,8-1,0 0,464 0,357 0,452 -0,107 0,032 0,095  

The ratio of total liquidity 2 0,945 0,853 0,834 -0,092 -0,006 -0,019  

The share of inventories in the amount of short-term liabilities

0,455 0,484 0,277 0,029 0,010 -0,207  

Analysis of investment attractiveness of LLC "UKRAGRO"

Analysis of investment attractiveness of LLC "UKRAGRO"

0,0000 0,5000 1,0000 1,5000 2,0000 2,5000 3,0000 3,5000

Рентабельність продажів

Рентабельність підприємства (сукупного

капіталу)

Рентабельність основних засобів і інших

необоротних активів

Рентабельність оборотних активів

Рентабельність власного капіталу

Рентабельність перманентного капіталу

Коефіцієнт загальної рентабельності

2013 2012 2011

The ratio of the General profitability

The profitability offixed capital

POC

The profitability of current assets

Return on fixed assets and other non-current

assets

The profitability of the company (total capital)

Return on sales

The strategy of attracting foreign investments for LLC "Ukragro" in a short period presupposes measures in

three main areas

• the investment in technological subsystem to increase efficiency of the enterprise’s activities;

• the investment in the social and labour subsystem;

• the investment in the business subsystems.

Investor - Polish company Globusmax.

The total investment is 264.250 UAH.

Short-term indicators of LLC "Ukragro“ investment project efficiency

№ Indicator Legend Value

1. Net present value NPV 186,72

2. The internal rate of return IRR 4,87

3. The profitability index РІ 1,71

4. Payback period PBP 7,66

0,000

0,500

1,000

1,500

2,000

2,500

3,000

3,500

Рентабельність продажів

Рентабельність підприємства

(сукупного капіталу)

Рентабельність основних засобів і

інших необоротних

активів

Рентабельність оборотних активів

Рентабельність власного капіталу

Рентабельність перманентного

капіталу

Коефіцієнт загальної

рентабельності

2011рік 2012 рік 2013 рік Прогноз

y = 0,0431x2 - 0,2296x + 0,3736R² = 0,9981

0,000

0,050

0,100

0,150

0,200

0,250

0,300

0,350

2011 рік 2012 рік 2013 рік Прогноз

Коефіцієнт загальної рентабельності Полиномиальная (Коефіцієнт загальної рентабельності)

Forecast

Forecast

Return on sales

The profitability

of the company

(total capital)

Return on fixed assets

and other non-current

assets

The profitability of current assets

ROE

The profitability

of permanent capital

The ratio of the General profitability

2011 2012 2013The ratio of

the General profitabilityPolynomial

Comparison of the profitability ratios of forecast values according

to the results of strategy implementation

Forecast calculations of cost reduction from the reconstruction of vegetable-processing plant of LLC

"UKRAGRO" till 2019

Name Amount of savings per year, UAH.

2016 2017 2018 2019

Total 379831 451691 509033 584671

The rates of economy growth to the level of 2014,%

123,4 146,7 165,3 189,9

Thank you for attention!