Summit News

Russia's Razgulay plans $690 mln investment

MOSCOW (Reuters) - Razgulay GRAZ.MM, one of Russia's largest agribusiness companies, plans to invest about $690 million this year and next tripling its land area and developing its sugar, flour and groats processing plants.

Razgulay General Director Alexander Soldatov said on Monday the company would export no less than 1 million tonnes of grain in the current 2008/09 season, up 18 percent, as Russia raises exports to about 18 million tonnes after a bumper harvest.

“We plan to develop our businesses in the coming years,” Soldatov said at the second Reuters Russia Investment Summit.

“We plan to increase the arable land area under our control to 670,000 hectares in 2009 from 217,000 hectares now in different parts of the country,” he said at the event, held at Reuters offices in Moscow.

Soldatov said Razgulay intended to invest 10 billion roubles ($392.9 million) in land acquisitions and rental this year, plus a further 4 billion next year.

The company also plans to invest 3.6 billion roubles in the development of its sugar refineries, flour mills and groats plants, Soldatov said.

Russia, the world’s fifth-largest grain grower and exporter last year, expects the 2008 crop to be its largest in 15 years in 2008. The government forecasts a harvest of at least 95 million tonnes, compared with 81.8 million in 2007.

Alexander Soldatov, general director of Russian agribusiness firm Razgulay, speaks during an interview with Reuters in Moscow September 8, 2008. REUTERS/Alexander Natruskin

Razgulay, which became the first major Russian agricultural firm to float shares in a 2006 initial public offering, raised $295.2 million in July in a secondary public stock offering to repay debt and buy land and agricultural machinery.


Soldatov said the share sales had made it easier for Razgulay to raise money, even during a global financial crisis.

“We have the great advantage of being able to raise money. We have open credit lines in certain large banks, which we can use whenever we need,” Soldatov said, explaining how the company would finance its projects.

“We also have the possibility of placing bonds at adequate prices and rates,” he added.

Soldatov said the company, which is listed on the RTS and MICEX stock exchanges in Russia, saw no need to place its stock on a Western exchange.

“We already have Western investors. They may invest in us by buying stock on a Russian exchange.”

Razgulay plans to raise sugar beet output this year to 1.8 million tonnes from 1.5 million in 2007, Soldatov said. Output of white sugar refined from beet would rise to 275,000 tonnes from 238,000.

Groats output is expected to stay close to last year’s level of 297,000 tonnes. Rice output is also expected to stay at last year’s level of 297,000 tonnes, he said.

Soldatov forecast Russia would be able to export about 18 million tonnes of grain in the 2008/09 season, up from nearly 13 million in 2007/08. Analysts have previously forecast this season’s grain exports at no lower than 15 million tonnes.

Razgulay posted revenue of 31 billion roubles ($1.22 billion) in 2007.

Additional reporting by Maria Plis and Melissa Akin; Editing by David Holmes