Full Name of Enterprise: Khmelnitsky Foodstuffs Plant
Short Description of Enterprise:
The construction of the plant was initially approved on 09/19/90. All necessary plans were made and construction started in November of 1993. Originally, the plant was under the authority of "OblPishchyeProm"; however, in 1996, the Khmelnitsky Foodstuff Plant was made an independent legal entity.
The following production lines and capacities have been envisaged to be installed in the Khmelnitsky Foodstuffs Plant:
The plant's production lines were determined by the importance of adequately providing citizens with these products. Research was conducted in order to determine if there was a need for the plant and what products would be appropriate for the plant to produce. The Kiev State Institute of Food Industry, "Ukrdiprokharchprom", analyzed statistical information, conducted market research, developed estimate documentation, and provided technical and economic substantiation for the project.
Building of the plant is planned to be conducted in two stages. The first stage consists of building the vodka production facility, storage containers for grain alcohol, warehouses, office space, and utility infrastructure. Once this stage is completed, the revenue produced by the sale of vodka will help finance the expansion of the product lines planned in the second stage that consists of building the facilities for production of tinned meat and soda water. Plans concerning product lines in the second stage remain flexible.
Investment Proposal: To complete construction and install production lines into the Khmelnitsky Foodstuff Plant's vodka production facility.
Project Requirements:
The cost of completing the plant's vodka production is estimated to be 3.5 million USDs. As of February 1997, 2.2 million USDs of the budgeted sum had been spent. To complete the building process and start production, it is necessary to obtain US $1.3 million in direct investment. The building process has been in part funded by credits from Ukraine Bank totaling 1.2 million USDs.
Market Perspective:
Sale of production within the Khmelnitsky Oblast is expected to account for 60% - 70% of the total production. A provisional contract has been made with a private distributor that has a network of stores throughout Ukraine that sell foodstuffs. This distributor announced that it was interested in purchasing 40% of Khmelnitsky Foods Stuffs Plant's production. Another provisional agreement has been made with a local company that controls 50% of the foodstuffs distribution market in the Khmelnitsky Oblast.
Regardless of offers to buy large percentages of production, Khmelnitsky Food Stuffs does not want to be dependent on one market or one buyer; therefore opportunities to export production have been sought. This effort resulted in a provisional contract with an Italian firm. The Italians also announced a desire to buy 40% of production. However, if it proves feasible, it will be our policy not sell more than 10% of production to any buyer so as not to become dependent on any one customer. In a continued effort to diversify our customer base, negotiations on provisional contracts are being made in other former Soviet Republics. As of now, a verbal agreement has been reached with company in Azerbaijan.
Origin of Materials:
The production of the vodka will utilize grain alcohol produced locally. The three spirit plants in the Oblast currently produce more than two million decaliters of high quality grain alcohol. For the production of the planned production volume of vodka products, it is necessary to have 400,000 decaliters of grain alcohol. Capacity is estimated to be 1 million decaliters of vodka per year.