MINSK WATCH PLANT
(JOINT-STOCK COMPANY)
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INVESTMENTáPROPOSITION

( Soory for this English one : that's problem of Minsk Watch Plant)

Contents 1.

1.1 The essence of the plan
1.2 The place of the realization of the plan
1.3 Production
1.4 The analysis of the market and competition
1.5 The raw stuff and materials
1.6 Equipment i technology and capacities
1.7 The organizabion of the prooluction management
1.8 Staff
1.9 Financial plan
1.9.1 Financial prognosis
1.9.2 The analysis of the financial plan

1. Discription of the plan.

1.1 The assence of the plan.

The main idea of the plan is to master gold men's and wamen's wrist-watch in serial production in 25-30 various external delorations on the actino productive areas togthe with the firm "Bumotech" (Switxer lend. To master in mass piroduction sources of feeding for quartz wrist-watches on the basis of the latest technology on the acting productive areas.

To master in mass production magnets for quartz wrist-watches on the acting productive areasa. To macter in mass production a winoling watch-spring for mechanical watches on the acting productive areas.

The realization of the present plan won t lead to accident situations and ecological soiling.The cost of the plan is 7000 thousand American dollars; 5000 thousand dollars nof them are pecenned to cober by a credit. The outlay is distributed as follows.

.The orgnisation of gold watch production on the basis of Swiss extertal design and frade mark is 3587 thousand American dollars. They include:

the price of 10000 sets of external design (gold bodies gold bodies-uristlets, leather straps, pasking containers) that is 2015 thousand American dollars;

the price of the couipment is 130 thousand American dollars;

the price of technology is to thousano American dollars;

the organisation of places for loork (special sector and control and test station) is 110 thousand American dollars;.

- the material for the winding spring is 200 thousand dollars;.

- the sources of feedinq are 200 thousand American dollars the madnetc are 200 thavand American dollars; the ruby stohes are 722 thoysand American dollars..

The organization of production of sources of feeding is 1900. Including:

the value of the equipment, that is 1200 thousand dollars;

the prices of technology that is 250 thousand dollars;

the organisation of places for work is 100 thousand American dollars, the prices of raw stuff is 350 thousand dollars.

The outlay connected with the organisation of the magnets and the winding spring comes to 1520 thousand American dollars and will be financed at the expence of our own sources.

1.2 Place of he rlalization of the plan.

This plan is realixed on the territaru of the joont-stock companny ''Minck watch plan'' on the acting productive areas. The plan is to make it passidte to save abort 300 places for work.

1.3. Production.

Man's and women's wri-watches are expected to be produced in 25-30 externat designs (a gold boby and a winding head, a gold body-wristlet with a gold winding o head, a gold body with a high guality lether strap and oth.)

An average monthly output is 1000. An average price of gold watches is 1000 American dollars with profitableness 25-30%. In CIS(Đ═├?) these watches are not produced nowadays.

Sources of feeding for quartz wrist-watches are foreseen to be produced. Nowadays the sources of feeding ( batteries type SC 0,03) are bougnt at Kussinsky plant TTK? of the Chliabinsk region, Russia, costing 25 cents per one baltory. On the world market the price of one baltery makes 22 cents including a tax on the additional valye and custon-duty.

Russian sources of fecding are distinguished not only by a high price but a lau quality too. The analysis of claimed watches shows tham are connected with a bad work of the sources of feeding. At the same time the plant is forced to deal with the precent delivererbecause of long ond settled cantacts and the pssibility to buy goods withaut prepayment at the plant TTK?.

On the world market the price of sources offeeding is a little louer ( Japan, China, Hong-Kong, Switzerland, Cermany and oth produce batteries ) but they damand prepayment. The annual production programme of output of feeding sources are to be 2500 thousand for ourselves needs, with increase of capacities up to 15000 thousand with a favaerable market in cauntries ot the CTS (Đ═├?) and in distant foreign contries. A trade price of a feeding source is supposed to be not higher than 16 cents with 20-25% of profitableness and a high quality. Market being satiated with sources of feeding, demand for quarlz wrist-watches will increase.The plan also includes production of magnets for quartz wrist-wathes, wich are bought nawadays at the Koussinsky plant TTK of Cheliabinsk region.

Russia at the pice of 10 cents per one magnet. The Koussisky plant TTK being monopolist in production of these goods, all the other wach plants are put in hard conditions with its price policy. Dorino 1995 they increased prices 4 times, in 1996 they have done it one time. Therefore producing 2500 thousand magnets with our own pavers is the principal program, it will permit not only to raise the will be 25-30% lower tpan the Kussinsky plants one. The plan supposes processes to work out new technological processes and to produce a spring for mechanical wrist-watches. Nawradaus MWP buys the winding springs at Russian plants of Sanet-Petersbourg and Bieloretsk at the price of 13,6 cents per one spring. With our aon production beino orgarized it will permit to produce sprinos at a lower price aving to metal being bougth in Grmany that is quality being by one order higher than the Russian one's and it will permit to adopta new techiolody. In 1995 about 20% of bought springs were condeemned. Besides enumerated goods the joint-stack company will produce 4340, thausand men's and women's, mechanical and quartz wrist-watches (clockwork) in 280 external designs, in 1996 the serial production of mecanical alarmclocks will begin, the production of motor-car clocks AKH and industrial manometers will carry on. The complex of services on servicing of produced production is supposed to be expanded all over the CIS (Đ═├?).

1.4 Analysis of the marlet and competitors.

The economical situation in the republic chracterised by general falling-off of production, reduction of volume of produced production has exercised in fluence on the work of the joint-stock company "MWP", including markets. The demand for watches is unsatis-factory in 1995 and in the Iquarter 1996. Fall of the demand is connected with several causes. In the first place, it hasn't been profitable to deliver the production at the world market (Hong-Kong, Poland, Roumania and others foreign countries) because of the stabilizcetion of the rate of exchange of the rouble regarding the American dollar on metals, materials and the rate of exchange of the dollar regarding the rouble in 11500 remain fixed. deliveries was 25-30%, sent to export became unprofitable. Adecision was made to reduce sharply the deliveries to export. In 1994 6878 thousand watches and mechanisms were realized in foreign countries, in 1995 they realized 2808, 4 ones. secondly, lawering of livinq standards, wten in general all the salary is spent on food products. In the third place saturation of the intertnal market by imported watches. The gold watches wich are proctically produced at the enterprises of the CIS's countries are supposed to be realized in the interpal market ant in thse of countries of the CIS and of the Baltic Sea. The market of production produced by the join tstock company is distributerd as follaws: everyday watches-36,5% are realized in the Republic of Belarus; 10,7%-52,8% in foreign countries. The Moto-car clocks are bought by the Russian enterprises the manometers by Minsk tractor plant and Russiabnenteprises.The competitors of the joint-stock company "Minsk Watch Plant", producing analogical production are. The first and the second Moscav watch plants; Ouglich watch plant Penza watch plant; Chistopol watch plant-all of them are Russia On the world market competitors are Switzer land, Janan, Hong-Kong, China, Germany, France! Sale of the production is supsed to be supported owing a hign quaality and consumer characteristics of produced production and relatively modeerate price. The plant offers servicino production contracts in order to attract customers. In 1996 contracts for delivery of mechanisms are signed to Hong-Kong on total 1200 thousand dollars USA, to Nigeria on total 360000 American dollars, to France on total 7000 dollars USA, to Germany on toptal of 7000 dollars USA, to Baltic countries on total of 200000 dollars USAQ, to sueden on total of 7500 dollars USA, to African countries on total 60000 dollars USA, they legalized the certificates of intentions on cooperation with firms of Raumania, Jugostavia, Poland, Germany, England and other countrces. A joint Ulirainian and Belorussian enterprise is being created on the basis of the plan "Arsenal", Kiev "Arsenal-dutches and instruments. The jaint-stock company "Minsk watch plantŢ°ű ň¨Ôˇń°ýˇŕ 100000 mechanisms and external designs in dismantled order a gear to the firm "Arsenal-Zuch",and the firm "Arsenal-Zuch" is to assemble and to bug them and to realize servicing. Navadaus the creation of the firm is on the final of ficial registration of documents with the Ukainian government. A joint enteprise "Evro-Zuch" has begun to function in Simferopol. The joint-stock company "MWP" is to supply to the firm 100000 sets of mechanisms and external designs in dismantled order. "Evro-Zuch" is to realize the assembly, the sale and the servicing of watches. A contract has been signed for the delivery of 300 thousand mechanisms of watches a year to Vitebsk instrument making plant for the complete assembly from its own extenal designs.

1.5 Raw stuff and materials.

Material and technical supply is realized on the whole by the direct contracts concluded with enterprises-deliverers 80 per cent of deliverers are in Russia. The concrete enterprises-deliverers are: Moscow, Kolchougino, Kirovsk, Komensk-Uralsky (all are Russia) ; Artiomovsk (Whraine) in non-ferrous metals; Koussa exact technical stones plan Koussa, The Cheliabinsk region, Russia in techical stones, cells of feeding, magnets, the joint-stock company of the closed type "Delta", Uglich, the Yaroslavlere-gion in quartz sounding-boards; the condenser plant, Novossibirsk, Russia in condensers; the joint-stock company "Microwire", Podolsk, Russia in microwires; the joint-stock company "Vremia", Sanct-Petersbourg in watch-sprangs; Sanct-Petersboursbourg, Electrostal; I jevsk-all of them are Russia, in steel; The production Association "stirol", Gorlovka, UKraine, in polystirol; the trade firm "Otto Volf", Germany ,in non-rerrous metal, gold,steel, solder; the firm "Sandwik", Sweden in silver steel; the firm "Bumotec",Switzerland in non-ferrous metal, gold chemicals, spare parts; the firm"Hest" Germany in chemicals. Spirit, petrol, acetone, points, enamels, ferrous metals, packing, auxiliary materials, working clothes, soap, and other technological materprises of the Republic of Belarus. The raw stuff and materials are delivered by our own motor-car transport. The material and technical supply will remain on the whole in accordance with remain on the whole in accordance with astablished economcal and production relations, any variants of buying of goods and materiaal values not being dismissed from deliverers wich offer them at lower prices.

1.6 Equipment, technology and caracities.

The joint-stosk company "Minsk Watch plant" is eguipped with highly efficient eguipment (home-produced and imported ones). There are in all 3746 units of technological eguipment at the eneterprise among wich there are 499 ones on micro-electronics. 185 eguipment wnits have been temporarily closed owing tothe production fall, 239 ones are to be closed. The eguipment is usled in the tecnological process by groups: 1. Mechanical machining of metals on the basis of the universal and special eguipment, machine-tools with numerial and computer control are 2088 units. 2. In the cold stamping are 379 units. 3. In the assembly production there are 338 units. 4. In the galvanic and varnishing covering there are 73 units. 5. In the production of printed plates and microschemes there are 393 units. 6. In the thermal production there are 21 units. 7 In the casting and moulding of plastics there are 26 units. 8. In the production of packing there are 4 units. The enterprise sees prospects of the development in buying a stock of up-to-date aguipment and technologies on production of sources of feeding magnets, winding spring, wich will permit to reduce production costs of produced wrist-watches, to get rid of monopolistic dictat of Russian plants, to improve the quality of doods

.1.7 Organization of the production, the management.

Joint-stock company "Minsk Watch Plant" is a collective enterprise in form of a joint-stock company of an open type. The enterprise is a juridical person and it Republic of Belarus (the Regulations are appended to the present business plan). Members of the labor body of "Minsk Watch Plant" are shaareholders and constituents. The meeting of shareholders is the supreme body of management of the enterprise. The management bard of the joint-stockCompany is an executive and instructive body of the enterprise that realizes management of its everyday activity. The President of the joint-stock company is the chairman of the Management board. The President realizes management of the activity of the enterprise. The inspection committee checks financial and economic activity of the enterprise. Outside organizations work with the plant onthe basis of contracts. Project decisions adopted in the plant of the production management envisage a complex decision of questions of improvement of the organisational structure of the enterprise, of the technology of managementworks, a turnover of documents; an improvement of social and personnel provision.

1.8 Staff.

The enetrrise is completed byan experinced engineer and technical personnel of various types, by highly skilled workers of various specialities. In February 1996 an averagesize of the joint-stak company "MWP" was 6072 persons including the enterprise's industrial persaons are workers, 387 persons are leaders, 522 persons are specialists, 34 persons are employees, 510 persons are non industrial personnel. The whole staff of the company has very high educational level. 746 persons have a high technical and econo˝al education, 850 persons heve a secondary cpecial education the others heva a secondary aducation amog workers, 445 ones have a secondary special education. The administrative staff has a high education. An averade age of workers is 37 gears. Minsk Polytechnical Academy, University of national economy, Minsk radiotechnical institute, Minsk polytechnical college the professional watch-makers school %10 are the muin deliverers of the personnel.

On the plant's balance there are: a polyclinic, a canteen, 7 kinderarten and creches, a food shop, a physical culture and health complex, a young pioneer camp, a meat-packing factory, a subsidiary agricultural farm. The enterprise is completely provided with places in the canteen and in pre-shool institutions.

1.9. Financial plan.

1.9.1. Financial prognosis.

. . . ..The financial plan is made on the basis of the programme of the increase of output of goods in compatison with 1995 and of organisation of production of new goods, that one having been examined in previous parts on the business plan.

. . . .The risk connected with possible changes in correlations between items of expentiture and incame wich can be caused by diferent reasons, including an unequal inflation in intems of calculations, is examined in the subdivision "Financial stability of the plan".

. . . .The plan embraces the period from 1996 till 1998 year. The choice of such horizon ofn planning is explained by the fact that impartant stages of the plan, namely: the period of acquirement and of putting into operation of an additinal equipment and technological processes, a steady production of new goods, the period of debt servicing.

Production programme.

The plan of the production and the realization of goods is given in terms of money in the corresponding appendix to the business plan. 30% of the production is planned to realize for export.

Raising of the production efficiency by introducing of new technological processes, the improvement of the production organization, lowering of production costs, mastering of new types of goods, all these are the optimum and effective ways of solving of the sale problem problem.
In the problem of forming of goods prices the enterprise adheres to the principle of fixing of goods prices depending on costs, a region of sale, a volume of bought goods, a form of payment.
On the one hand it is necessary that the prices should correspond to the market ones and that they should contribute to the steady demand, on the other hand they should ensure paying production and getting the maximum profit.
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An increased attention will be paid to advertising of the output production, the allocation of additional means being provided for it: publication and distribution of a catalogue on the produced production to the potential buyers; a regular participation inspecialized exhibitions, fairs in the Republic of Belarus and in other countries, advertising of the production in periodical mass press ( newspapers, magazines), on radio and TV.
Investments and their financing.
The investments schedule in total amount of 7 000 thousand USD is given in the appendix to the business plan "Schedule of investments for the period from 1996 till 1998."
Financing of the purchase and the installation of the equipment is supposed to realize by loan means. For this purpose they plan to take a credit on amount of 5 000 thousand USD in the second quarter of 1996.
While accounting the following credit terms have been used: the credit is to be paid within 3 years. Liquidation of the main amount is to begin from the lV quarter of 1996 by equal parts during 3 years.The schedule of the liquidation of debts is given in the appendix to the business-plan.
Financing of the increment of the circulating capital is to be irealized by our oun means.
Liquidation of old debts.
On the 1 of january 1996 the debts were 29411 million roubles or 1948 thousand USD. The schedule of the liquidation of debts is given in the appendix to the business plan.
Production costs.
The table of general production costs per years is given in the appendix to the business plan: "General production costs". While accdounting the planned outlay of 1996 has been taken as a basis. The balance profit is 35625 million roubles, profitableness is 12%.
Ned for the circulating capital.
The circulating capital is to be increased at the rate of 30% of pure profit. The distribution of the pure provit is given in the appendix to the business-plan: "Account on the pure profit".
1.9.2. Analysis of the financial plan.
The total amount of the investment outlay in the period from 1996 till 1998 will make USD7875,0 in prices for the end of march of 1996. The loan means ( USD5 000 thousand) will make 63,5% from this amount. The loan means will be assigned for financing the equipment and the technology ( USD1 800 000) and for financing the acquirement of materials and completings ( USD# 3 200 000).
The general increment of the circulating capital USD2 875 000 is to be financed from our own means. In consideration of the foregoing it is possible to affirm that the plan of the joint-stock company "Minsk Watch Plan" on increasing of the output of goods and on organization of the production of new goods is highly liquid, paying and the whole efficient..
1.1 The essence of the plan
1.2 The place of the realization of the plan
1.3 Production
1.4 The analysis of the market and competition
1.5 The raw stuff and materials
1.6 Equipment i technology and capacities
1.7 The organizabion of the prooluction management
1.8 Staff
1.9 Financial plan
1.9.1 Financial prognosis
1.9.2 The analysis of the financial plan
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