Doing business in Belarus

31 of January 2012

2

99,57 %

AS A. Le Coq

Estonia

AS A. Le Coq

EstoniaVolfas Engelman

Lithuania

Volfas Engelman

LithuaniaA/S Cesu Alus

Latvia

A/S Cesu AlusLatvia

100 %

The structure of the Olvi groupThe structure of the Olvi group

98,2 %

OLVI PLC

Finland

OLVI PLC

Finland

JSC ”Lida beer”

Belarus

JSC ”Lida beer”

Belarus

91,6 %

Why Belarus?• Geographic location and opportunity grow for Olvi group.

• Access to Russian market and other markets of common custom zone

• Ready-to-do production

• Formed management team

Risks• Political influence on economic processes

• Control of only 51% at the beginning of investment

Something controllableSomething controllable

Actions to make things happen• Increase Authorized Capital Stock and issue additional shares

• Make great offer to minor shareholders

Result of investment. Expectations and reality

• Met all profit indicators through 2009-2011 years.

Olvi Challenges• Difference in mentalities influences on the attitude for

changes. Resistance is higher.• Great investments in to education of personnel in order to

motivate them to work differently.• Slowing down all process (construction took 1,5 more years).

Points you have to consider• Politic defines economic:

– Belarus have to produce import substitute. Main direction is to copy instead of to invent.

– Protection of local producers by administrative measures.– Local currency devaluation process and covering this by complicated

accounting system.

Plans and reality • According to presidential decree in 2012

– GDP has to grow on 5 – 5,5%, – inflation rate 19-22%– Export growth 11,6-12,3%

• In comparison with 2011 forecast was:– For inflation rate – 7,5-8,5% (fact 110%)– For local currency devaluation – 8% (fact 180%)

Could be equal, but through tough measures

• Consider economic model of Belarus:– Power of government officials– Social economy orientation exceeds business reasonability

• Consider negative scenario:– Must have anti-crisis plan: strategy, resources, flexibility in business

procedures and processes

Recommendation for doing business

Recommendation for doing business • Top management:

– Think in advance about who you will work with (knowledge of language, proper education (MBA), western style of working experience)

– Think about whole team (recruiting one by one will slow down all the processes)

Recommendation for doing business • Your business “hardware”

– Consider real price of company where you are going to invest. (difference in reality and accounting documentation could be significant)

Something you can get use to • Business trip it is a complicated process:

Set a meeting

Go to meeting

Send internal memo

Set a meeting

Send memo to accounting

Write assignment for business trip

Prepare an order for trip

Go to meeting

Take a stamp on authority docs

Get back and write a report

Get travel expenses

Come back

Thank you