ROTOMOLDING PRODUCTION START UP PROJECT IN RUSSIA MOSCOW REGION

Section I. Brief description of the project

There is a decryption of staring up project in the very new industry with high efficiency and great potential in Russia - rotomolding production. This sector has been developing in Russia since 2007. Rotomolding production gives an opportunity to do great variable products which are in high demand on the market. In Moscow region there are three real competitors, one of which focuses on products for the construction (not our case), other has an obsolete and not efficient equipment for the time being

Our competitive advantages are: Romomolding production, modern equipment, managerial skills of partners and possibility to work on its own assets. The place (Moscow region) is also a great plus to the future of the business.

All these guarantee that the business will have a sustainable development for many years. And even with very conservative attitude, the company will have a 10 -15% the market share in 3 years.

The partners on the business are looking for a loan of 3 500 00 USD for 6 years. ROI 200 % And offer collaterals in the form of building and equipment for investor to minimize investor’s risks. Before putting into operation building (supposed to build it from scratch) and equipment, Investor will control all expenses for the first 6 months. The research is already made. 150 000 USD was spent. The company is ready to operate.

Pls. write: julia935g@mail.ru skype: julia935g

Section II. Description of the sector of the company, its products

Sector description: recently on the Russian market increased demand for products obtained by rotational molding (Russian Federation), including large-size containers of various purposes. The method of the Russian Federation can be recycled thermoplastic polymeric materials (PM), originally located in powder. With these method polyethylene goods, polypropylene, nylon, polycarbonate and polyurethane are produced. For processing of thermoplastics the most popular methods are pressure die casting, extrusion. Rotational molding is used much less frequently. According to experts, the share of plastic products received by Russian manufacturers using this method, does not exceed 5%, while mastered only 20% of the existing needs of the market products. Use of the method of the rotational molding for the production of products is prevented by the significant cost of their transportation. It can be argued that this technology is focused mainly on local markets, so in different regions naturally there is a need to organize such production.Features of the production of products from thermoplastic materials produced by the method of rotary forming:Application of the rotational molding method makes it possible to produce products, which are impossible to obtain in other ways: capacity for individual sewage facilities, small-size and large capacity (up to 30 m3, containers of various purpose, garden furniture, guardrails, children's playgrounds, the goods for winter recreation. It is known that hollow products from thermoplastics can also be read by extrusion blow molding. But the drawback of this method are the thickness of the products due to the heterogeneous draft degree procurement in various places; significant waste material in the form of a matrix, inevitable under this method; periodic mode of operation of the extruder.

Method of rotational molding has a number of advantages compared with other types of plastics processing: the ability to manufacture products of a complex configuration; the multiple layers of products; the ability of reinforcement products metal and plastic parts; regulation of wall thickness of the product, varying quantity of the loaded in the shape of the material (the method of the RF can obtain a product with a wall thickness of 5-20 mm) and non-waste production;

Raw material market.Raw materials is the low density polyethylene (LLDPE - linear).The basic manufacturers of raw materials in the world are:

Main suppliers India Petrotech Internationalhttp://www.petrotechgroups.com

China Aishuibao

  Jushui http://www.jushui.com  Korea LG Chem  Daelim http:www.daelimchem.co.kr  Sam-A C&I Co. http:www.samacolor.com  Hyosung

SK  Honam Petrochemical http://english.hpc.co.kr

 Hyundai Engineering Plastics http://www.hyundai-ep.com

 Russia Ufaorgsintez

  Kazanorgsintez http:www.kazanorgsintez.ru    Nizhnekamskneftekhim http://www.nknh.ru

During the 1st and 2nd years of existence the company is planning to buy raw materials from local wholesale sellers at an average price of 2,3 USD /kg Largest wholesale supplier of imported raw materials is the company «Ecoplastik» (http://www.ecpl.ru). Traditionally wholesale suppliers begin to work on an advance payment, in the future, there may be a small installment payment. In the future, when the company's turnover will increase, possibly to buy raw materials from direct producers, both Russian and imported, depending on the market value.

Section III. Market analysis and marketing plan

Business competitorsName Regions of activities Production Functional

activitiesAd, PR, marketing activities

The estimated market share Moscow region 2013 in %

The estimated market share in the Central Federal district of the Russian

Federation (50% of the Russian Federation) 2013. in %

Anion, Ltd + Kation, Ltd

Moscow(The branch and warehouse on the leased premises.), Moscow region(In Klin is manufacturing, warehouse and head office in the area of the property), Saint-Petersburg(Warehouse on the leased premises), Ekaterinburg (Warehouse on the leased premises), Krasnodar (Warehouse on the leased premises), Nizhny Novgorod, Dzerzhinsk (Manufacturing, warehouse and branch in the area of the property)

Septic tanks (up to 14500 liters, caissons, wells+products of polyamide

Engaged in rotomolding and casting polyamide (PA 6). Lately seen activity in development of agriculture in the Orenburg region. Work on Rotomolding since 2006 (the equipment of the joint Assembly with the English Nylacast). According to unconfirmed information, the founders of 2009 are in conflict on the grounds of the so-called "Case of Chemists" (Illegal shipment of ethyl ether). Main market: state order and distributors.

As such - are not engaged. All media activity given the chance Directors objects.

10% 5%

Triton plastik, Ltd + Elit Story Invest, Ltd

Moscow (The Head office, Manufacturing, Warehouse), the Moscow region: Mytishchi (A Warehouse of raw materials and manufacturing), Turaevo (Warehouse, manufacturing)

Septic tanks, caissons, and wells.

Actively promoted in the Central regions of Russia. Business in shares (75% husband and 25% by the wife).

There is no specialist . The founder is engaged in advertising activity personally. A superficial analysis allows to do assumptions this is not effective.

15% 8%

Rotoprom, Ltd

City Vladimir Russia

Rotomolding forms production, septic tanks, caissons, and wells.

Rotomolding production was organized as a subsidiary of the production at processing of metal rolling. The basic profile of the company is metal-roll.

Minimum, because consider it is not necessary. Media work - no. Production Manage is engaged in Media activity

5% 3%

Ekopol, Ltd City Vladimir (Warehouse and Office), Moscow (Warehouse)

Septic tanks(up to 6000 liters), caissons, and wells.

Rotomolding production was organized in 2002. Currently experiencing difficulties with sales.

The lack of activity since 2012.

5% 3%

Group of companies Mefodiy

Moscow region, Ramensky district, Ostrovci

Boats, Canoeing, pontoons, cast forms for rotomolding.

Was established as a subsidiary enterprise engaged in the manufacture and installation

Activity is observed in the promotion of boats by web.

5% 3%

of plastic and aluminium profiles.

Elgad Polimer, JSC

Moscow Septic tanks, caissons, and wells.

Formed as a subsidiary company of building holding "Elgad".

Carry out the activities in the framework of the overall communication strategy of the parent company.

10% 5%

Group of companies EcoProm

Moscow region ,Mytischi and another 10 objects in the Central Federal district

Rotomolding equipment. Septic tanks, caissons, and wells.

High activity in the framework of media activities of the main Holding.

Activities in the framework of the functioning of the group of companies.

30% 15%

Rotoplast Moscow region ,Mytischi

Septic tanks(up to 6000 liters), caissons, and wells.

Created to support the needs of a building complex of Moscow

According to the analysis of sites for job seekers, the has positions in marketing. No advertising neither PR.

10% 5%

Others         10% 55%

Basic groups of products to be manufactured by the company, received by rotomolding:

1. Tanks of different shapes and sizes, designed for different variants of their use, with the volume from 100 to 10000 litres, i.e. the possibility to receive by rotoformation products without seams and consequently without the danger of weak sections allows containers guaranteed to withstand a pressure of liquid filled. All of the tanks on customer request can be equipped with fittings. Material containers usually polyethylene, this material has a very high resistance to most aggressive chemicals and allows the use of polyethylene tanks for storage of the most aggressive chemicals. The polyethylene absolutely non-toxic, and allowed for contact with food products, that allows to use it in the food industry.

2. Products for private household plots. This group includes a wide range of products from tanks, mobile showers and mobile peat toilets to small children's pools and garden furniture.

3. Sanitary-technical products. Mainly in the CIS are widely used septic tanks for wastewater treatment, it is much easier and economically more advantageous than the use of traditional wells

of concrete rings. However, in addition to septic tanks rotomolding produce a large range of funded systems of purification of underground systems, all kinds of oil catchers, integrated sewage system for the device of canalization in the scale is not only one house, but of the whole village.

4. As a separate group of products, toilets must be selected. Rotomolding get all the details of portable toilets from the tank to the walls and the roof. In the toilets in this arrangement there is no metal frame and other metal elements that, when installing a cabin under the open sky, are the most vulnerable components and limit the service life of the product. The lack of such elements makes the toilets produced by rotomolding, most appropriate to use in the any weather conditions.

5. For agriculture - products for cattle-breeding complexes and poultry farms (bins, drinkers, houses for calves and so on).

6. Products for river and sea complex - pontoons, buoys. While having a simple design, low cost and high buoyancy pontoons can be collected in the design of any shape and size for a variety of needs.

7. Special containers for installation on agricultural equipment, under any order can be developed and released the necessary capacity of any size and shape.

Classification of clients of our company:

Retail clients - terms of payment - prepaid.

Corporate, wholesale clients - terms of payment: prepaid, special promotions and discounts

Large retail chains, hypermarkets DYF - terms of payment - factoring

Dealers - variety of instruments- prepayments, factoring (the banking Commission by the dealer) (no risk on no payments)

Conditions of work with clients: work with minimal risks for the prepayment for dealers and large networks, it is planned to use factoring. In the result the company will have more liquidity, high turnover, the minimum difference, there is virtually no client receivables.

The prospects for our company: for the successful implementation of instruments of PR, advertising and marketing possibly permanent increase of sales. Increase instrumentation settlement and reduction of delivery terms of the distributor or end user gives competitive advantages. Progressively growing demand for capacity over 10,000 liters for agriculture and industrial production. Prospects of opening of branches and warehouses in the Central Federal district. When solving the transport issue - shipment railroad transport, open storage in more remote towns with population over one million, where this type of business is almost not represented. The prospects for the CIS in the area of the single customs Union: the Opening of the Belarus production to work on a foreign market, the resource base is present, Kazakhstan opened a warehouse - virtually no competition, also in Kazakhstan, there is no resource base.

Section IV. Start up of production

Start up of production: analyzing the market on the available proposals on the market for land, leasing of manufacturing spaces, the company's Partners have come to the conclusion about its own industrial spaces. Companies in Moscow are actively developing industrial sites in the Moscow region. The selected plot of land is near the central gas and electricity.

Own assets of the company will ensure the stable, sustainable development of the company for many years. Furthermore, by building a production premises at cost, the market value will increase by 2-3 times after putting into operation. That is, when necessary area of 2000 sq. m. the cost of construction will be 1 201 030 USD + cost of land 300 000 USD for 0.5 hectares. Total cost of the production complex without equipment will be equal to about 3, 5 million USD.

According to the schedule the following are needed: approval of the project, construction, connection of communications, equipment installation and launch of production. It is planned to start the project in October 2013, One (1) month for the development and coordination of the project. Construction will take three (3) months, and the connection of communications take another three (3) months, at the end of this period, installation of equipment. Total project on putting into operation of the production complex is 1+3+3= 7 seven (7) months. The company is interested in entering the market next year.Production: the Company will produce mainly mid-size products.

Section V. the Characteristic of the equipment and production plan

For the cost-effective rotational formation of intermediate products is advisable to use a rotary- moulding machine with independent conveyors PRM 3500-2C (VAT $400000). Basic equipment includes: the burner connected with furnace, cooling chamber, the central column, 6 PLC controls, moving conveyors, conveyors holder levers, electrical control equipment.

PRM 3500-2С

PRM 3500-2С

Also, it is advisable to consider the full cycle of processing of raw material (granules and re-granules). For the preparation of the fine fraction HDPE need mill. To maintain the volume of production and provision of high maintainability you must use common HDPE mill MF-600 (27 000 $ with VAT).

MF-600

For processing of defective products, overflow and low-quality raw materials necessary complex of equipment for processing of solid waste, consisting of: Schroeder, combined with the crusher (YMSC-4080 cost of $ 50,000 with VAT) and granulation line (TR-VS cost of $70,000 with VAT).

YMSC-4080

TR-VS

This equipment allows processing 3 % of spoilage and, beyond that, to give 100 kg of granules per hour, which covers the needs of equipment for rotomoulding.

Thus, the full cycle will be as follows. HDPE granules goes to the bunker mill, next goes the small fraction that is loaded in a prepared form for casting. Form is sealed and sent to the burner. After rotation of the form in the oven it moves in the cooling chamber, where goes the process of crystallization. Then the form is opened, the product is removed and is handling by flexible cutter. After that we have the overflow and finished product. When the accumulation of sufficient amount of waste they are sent to the shredder and mill where fraction is prepared for recycling into granules.

The very conservative assumption is made that during 1st year - 1 shift and 25% of loading of capacities, 2nd year – 1 shift and 25% of loading of capacities 52 % of loading capacities. From the 3-d year there is increase in sales and production by 35 % each year.

Seasonal business: June-August – maximum loading capacity, September-October – 80 %, November – March – 50 %, April-May – 80 %. This factor is included in calculation. All this assumption are made on the analysis of competitor’s activity, but our figures are extremely conservative.

During the offseason, the company makes a small stock of finished products ( up to 10 days) , as well as working on the state orders, molding produces, develops a product, looks for ways to corporate

orders, enters the markets of the CIS countries with a milder climate, engaged in preparation for an extensive advertising campaign in the next year.

Section VI. A technical modification of the product.

List of the additional equipment:Cutters on flexible shaft;Disc saw;Angle grinder;Pressing cutter;Measuring instruments.

Additional processing

During production, when the withdrawal of the finished product from the form, there is a removal of formed overflow. It is carried out with the use of cutters on flexible shaft. If necessary to countersink the edges of the holes, toothed disc saws carbide and good free cut are used, or cutters installed in the auxiliary tools. Cost of the equipment for technical modification is about USD 3000 in 2013. Calibration of finished products is not required, since the chiller is used.

For some types of products, it has to mount the flexible fittings (septic tanks) and/or pour working fluids (septic tanks, toilet cabins). Also, after implementation of the technology of production of electric septic tanks, the wiring and filling of the chemical reagents are needed.

Under these tasks it is planned to use the work shift, consisting of 3 people. As this work does not require special permits and carried out by people who do not require degree of a specialist, these works can be made during the day or the night shift. A maximum efficiency of the technological equipment, when on the production of 1(One) form was spent 20 minutes, in parallel shifts in the daytime and in the case of seasonal congestion production, night shift will be created.

Section VII. Management team

There are two main blocks: the commercial and industrial, each partner is responsible for the relevant blocks with extensive experience in these areas.

Commercial unit is responsible for the daily operations and creation of promising solutions (sales, planning, the marketing strategy on the market, logistics).

The manufacturing unit is responsible for the production, provision and operation of the complex as well as for developing new products. In the diagram below show all staff required for this type of production and sales, with mutual replacement of staff.

Section VIII. Risk assessments

Country risk. Russia as a country for investments. Acceptable investment climate settled and clear the current legislation. Russia remains attractive for investments due to the highly profitable projects, stable political and economic situation.

Industry and raw materials risks. Minimal. Rotational molding is developing in Russia since the 2006-2007 year. The industry itself is very young and promising. Product range is practically excludes foreign competition due to transportation limitations for large-sized products. Raw material risks practically does not exist, because there are Russians and import manufacturers on the market.

Regional and production risks. Sales are scheduled to begin in area of Moscow (12 million) and Moscow region (7 million). This region of Russia is the most numerous, with high purchasing power and with a constant migration of people from other places in Russia. The competitive environment in the region mainly consist of 3 (three) companies described above, the company Ecoprom http://www.ekopromgroup.ru/, Triton Plastic http://triton-plastik.pulscen.ru/ and Rotoplast www.rotoplast.ru, with approximate market shares of 30%,15% and 10% respectively. All these three companies are not performing active PR active marketing policy and till now, only one company Ecoprom uses modern high-performance equipment of the company Rotomachinery Group, Italy http://www.rotomachinery.com . The company Triton Plastic owner - a former worker who is facing difficulties with the competent organization of business. The company Órotoplast - limited range of product, mainly for the construction market.

The company will use only the gas equipment. The planning spot location ( 25 km from Moscow) is fully equipped with Central communication, thus operational risks are absent, staff is always available in the_region.Our company with a competent top management, high-performance equipment, good location (about 25

km from MKAD East) and a good advertising budget in the next 2-3 years will win up to 15 % market share in Moscow and Moscow region while building a dealer network in the Central Federal District.

Financial risks:

Minimization of risks: property on land, building, equipment and transport. Collaterals on building and equipment are suggested on these assets. Building – construction cost: 1 201 030 USD (with utilities), after putting into operation, market value of the building would be higher in 2, 5 times i.e. 3 002 575 USD (durability 40 years). Cost of equipment is 700 000 USD (durability 25 years). In business plan insurance of these assets is included. Collateral would be 3 002 575+ 700 000 = 3702 575 USD

Land (300 000 USD for 0, 5 Ga.) is appreciated each years by 6-8 %. Transport - 262 000 USD (durability 7 years)

As a suggestion: Before having the collaterals (in 6 month after start up), Investor would control all expenses (by approving all payments).

Section IX. Finance plan

   One shift 25 %  One shift 52 %  by 35% by 35%  by 35%  by 35%P&L for 6 years  USD  USD USD USD USD USD   1-st year  2-nd year 3-d year 4-th year 5-th year 6 year              Sales manufacturing:                910 000             1 892 800        2 555 280        3 449 628        4 656 998        6 286 947  Main product                910 000             1 892 800        2 555 280        3 449 628        4 656 998        6 286 947                    Costs:                256 688                533 111           719 700           971 595        1 311 654        1 770 732  Basic component Material                244 183                507 901           685 667           925 650        1 249 628        1 686 997  Other component Material                   10 000                  20 000             27 000             36 450             49 208             66 430  Сolorant                     2 505                     5 210                7 033                9 495             12 818             17 305                    Utility payments                   28 864                  56 818             62 598             70 402             80 936             95 158  Diesel for  heating                   15 152                  30 303             30 303             30 303             30 303             30 303  Electricity                     5 455                  10 000             10 000             10 000             10 000             10 000  Water supply                     1 818                     3 636                4 909                6 627                8 947             12 078  Gas for equipment                     6 439                  12 879             17 386             23 472             31 687             42 777           Expenses Production Sales              1 151 610             1 143 050        1 163 908        1 210 378        1 268 564        1 341 091  

AdminAdvertising                309 091                309 091           309 091           309 091           309 091           309 091  Diesel for transport                   26 364                  35 152             47 455             64 064             86 486           116 756  Lease of land                            -                             -      -   -   -   - Office rent for sales                     7 576                     7 576                8 000                8 000                8 000                8 000  Salary ( inc.taxes)                536 615                536 615           590 277           649 304           714 235           785 658  Communications expenses                   20 000                  21 818             21 818             21 818             21 818             21 818  Property Tax ( equipment)                     5 455                  10 909             10 909             10 909             10 909             10 909  Property Tax ( building)                     4 545                     9 091                9 091                9 091                9 091                9 091  Insurance building 1,5%                   16 364                  16 364             16 364             16 364             16 364             16 364  Insurance transport %                   13 433                  13 433             13 433             13 433             13 433             13 433  Transport Tax                        804                        804                   804                   804                   804                   804  % loan agreement                175 000                145 833           116 667             87 500             58 333             29 167  Unforeseen expenses                   36 364                  20 000             20 000             20 000             20 000             20 000           Total expenses             1 437 162             1 732 979        1 946 207        2 252 375        2 661 154        3 206 982           EBITDA -              527 162                159 821           609 073        1 197 253        1 995 843        3 079 965  EBITDA, % -58% 8% 24% 35% 43% 49%         Depreciation                   39 394                  39 394             39 394             39 394             39 394             39 394           Income before tax -              566 556                120 427           569 679        1 157 859        1 956 449        3 040 571           Income Tax 20 %                          -               24 710           231 572           391 290           608 114           Net income -              566 556                120 427           544 969           926 287        1 565 160        2 432 457           Volumes for suppliers                118 149         Volumes sales manufact. (Units)                     1 181                     2 458                3 318                4 479                6 046                8 163  avg. Sales price                        770                        770                   770                   770                   770                   770  Cost of materiala of Sales, % 28% 28% 28% 28% 28% 28%Total cost of Sales % 158% 92% 76% 65% 57% 51%             

In the above table P& L for 6 years all income, expenses and taxes for 6 years are included. As an expense a probable interest on loan is shown as well. The sum of net income for 6 years is equal to

5 022 743 USD. The very conservative assumption: 1-st year 25 % loading o f capacities, one shift, 2-nd year 52 % loading of capacities, one shift, and from the 3-d year the company is shown 35 % increase in sales each year.

 USD  USD USD USD USD USDCash flow  1-st year  2-nd year 3-d year 4-th year 5-th year 6 year             Cash per bank - beginning balance       3 500 000           282 551             62 625                   261                   986           498 037        Investor borrowing drawdown beginning balance       2 300 000        2 916 667        2 333 333        1 750 000        1 166 667           583 333 Interest payments   beginning balance          175 000           145 833           116 667             87 500             58 333             29 167 

          

Operating cash receipts             Sales - collection from 3rd parties customers          910 000        1 892 800        2 555 280        3 449 628        4 656 998        6 286 947               Total operating cash receipts          910 000        1 892 800        2 555 280        3 449 628        4 656 998        6 286 947        Operating disbursements             Regular payroll (net salaries)          536 615           536 615           590 277           649 304           714 235           785 658 Rent and lease payments               7 576                7 576                8 000                8 000                8 000                8 000 Utilities (energy), telecom, direct debits            28 864             56 818             62 598             70 402             80 936             95 158 Advertising          309 091           309 091           309 091           309 091           309 091           309 091 Insurance building 1,5%            16 364             16 364             16 364             16 364             16 364             16 364 Insurance transport %            13 433             12 090                9 672                6 770                4 062                2 031        Raw materials suppliers          256 688           533 111           719 700           971 595        1 311 654        1 770 732 Monthly tax payments (VAT) -       391 077   -       215 046              43 822           370 785           521 874           725 844        Monthly payments - other            57 168             77 774             90 077           106 686           129 108           159 378        Other            36 364             20 000             20 000             20 000             20 000             20 000 

              Total operating disbursements          871 085        1 354 393        1 869 600        2 528 998        3 115 324        3 892 257        Total operating cash flows            38 915           538 407           685 680           920 630        1 541 674        2 394 690              Non-operating disbursements     Capex payments land incl VAT          300 000  0 0 0 0 0Capex payments building incl VAT       1 090 909   Capex payment building's utilities incl VAT          110 121   Capex payments equipment include          700 000   Transport include          262 000   Corporate income tax payments                     -                        -               24 710           231 572           391 290           608 114 Other non-operating payments     Non-operating disbursements       2 463 030                      -               24 710           231 572           391 290           608 114    Funding-related flows     Investor borrowing drawdown / (re-payment)          583 333           583 333           583 333           583 333           583 333           583 333 Interest payments income / (expense)          175 000           145 833           116 667             87 500             58 333             29 167 Withholding Tax 20% on loan  interest             35 000             29 167             23 333             17 500             11 667                5 833 Capital & dividends in-flow / (outflow)                     -                        -                        -                        -                        -                        -      Funding-related flows          793 333           758 333           723 333           688 333           653 333           618 333    Net change in cash -    3 217 449   -       219 926   -          62 364                   725           497 050        1 168 243    Ending balances     Cash per bank - ending balance          282 551             62 625                   261                   986           498 037        1 666 279              

In the above table Cash Flow for 6 years all inflows and outflows for 6 years are included. As an outflow a probable loan and interest on loan is shown as well. The very conservative assumption is taken for the base. Cash Flow table shown: loss for the first year reduced net profit for the 2-nd year. VAT as usual - during the first 2-3 years – is a receivable and after than payable. After the third year we can see a stable increase in cash.

Section X. Proposals on the terms of financing

Loan 3 500 000 USD for 6 years. In tables P&L and Cash Flow loan repayment and possible interest on loan are included.

ROI 1 year 2year 3 year 4 year 5 year 6 year Total USD     Profit -      566 556           120 427           544 969           926 287        1 565 160         2 432 457       5 022 743   

   Purchase price        3 500 000             Sales price:    Assets at market value:    Land          300 000          324 000           349 920           377 914           408 147            440 798          440 798   Building      3 603 091       3 513 014       3 422 936         3 332 859        3 242 782         3 152 705       3 152 705   Equipment         700 000          672 000           644 000           616 000           588 000            560 000          560 000   Tranport         262 000          224 571           187 143           149 714           112 286              74 857            74 857        total:        4 228 360                  

ROI =                         2   

NPV is not shown because in Table Cash Flow loan repayment and possible interest on loan are included.