Feasability Study Raut_english

7/31/2019 Feasability Study Raut_english

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Feasibility Study on creation of the Industrial

Park on the territory ofRAUT JSCin Balti

Beneficiaries:

Ministry of Economy of the Republic of Moldova

United Nations Development Program in RM

Executor:


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Feasibility study on creation of the Industrial Park on the territory of JSC Raut , Balti

CONTENT

ABBREVIATIONS ......................................................................................................................................... 8

EXECUTIVE SUMMARY .............................................................................................................................. 9

1. INTRODUCTION ................................................................................................................................ 11

1.1. DESCRIPTION OF THE PROJECT IDEA AND OF THE INDUSTRIAL PARK

CONCEPTION................................................................................................................................................................ 11

1.2. GOAL AND OBJECTIVES OF THE STUDY........................................................................................... 12

1.3. BRIEF OVERVIEW OF ECONOMIC ENTITY...................................................................................... 12

1.4. OVERVIEW OF THE ELABORATING COMPANY............................................................................. 13

1.5. METHODOLOGY............................................................................................................................................ 13

2. ANALYSIS OF THE REGION ............................................................................................................ 15

2.1. ANALYSIS OF BUSINESS ENVIRONMENT......................................................................................... 15

2.1.1. Sectoral analysis ................................................................................................................... 15

2.1.2. Analysis of regional business activity .............................................................................. 18

2.1.3. Analysis of labour productivity ......................................................................................... 20

2.2. ANALYSIS OF INVESTMENT CLIMATE............................................................................................... 21

2.3. ADMINISTRATIVE AND TERRITORIAL ORGANIZATION......................................................... 23

2.4. ANALYSIS OF THE SOCIAL AND ECONOMIC ENVIRONMENT................................................ 24

2.4.1. Analysis of the demographic situation............................................................................. 24

2.4.2. Analysis of labour force....................................................................................................... 25

2.4.3. Analysis of people welfare .................................................................................................. 28


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3.2. ANALYSIS OF LEGAL COMPLIANCE FOR GRANTING THE TITLE OF INDUSTRIAL

PARK33

4. OVERVIEW ON THE ECONOMIC ENTITY ................................................................................... 36

4.1. COMPANY PROFILE..................................................................................................................................... 36

4.1.1. Brief history .......................................................................................................................... 36

4.1.2. Field of activity. Companys products and services ....................................................... 36

4.1.3. Companys size ...................................................................................................................... 37

4.2. ENTERPRISE POTENTIAL ........................................................................................................................ 38

4.2.1. Diagnosis and localization of infrastructure................................................................... 38

4.2.2. Diagnosis and infrastructure of utilities .......................................................................... 41

4.2.3. Technical Diagnosis ............................................................................................................. 45

4.2.4. Operational diagnosis.......................................................................................................... 49

4.2.5. Human resources and organizational structure ............................................................ 53

4.3. COMMERCIAL AND MARKETING DIAGNOSIS................................................................................ 57

4.3.1. Analysis of activity and contracting policy...................................................................... 57

4.3.2. Analyses of distribution and marketing activity and policy ........................................ 60

4.3.3. Analysis of promotion activities and policy .................................................................... 61

4.3.4. Pricing policy......................................................................................................................... 61

4.4. ECONOMIC AND FINANCIAL DIAGNOSIS......................................................................................... 62

4.4.1. Balance sheet analysis ......................................................................................................... 62

4.4.2. Analysis of financial results and expenses ...................................................................... 66

4.4.3. Analysis of financial indicators.......................................................................................... 67


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5.5. IDENTIFICATION OF MODELS OF ORGANIZING THE MANAGING COMPANY AND

FUNDING MANNERS FOR CREATION OF TECHNICAL AND PRODUCTION

INFRASTRUCTURE OF THE INDUSTRIAL PARK........................................................................................ 88

5.6. BUSINESS PARK INDUSTRIAL ORGANIZATION.............................. ................................ ........... 106

6. ACTION PLAN .................................................................................................................................. 118

6.1. LEGAL ACTION PLAN................................................................................................................................ 118

6.2. OPERATIONAL ACTION PLAN.............................................................................................................. 124

7. INVESTMENT AND FINANCIAL DIAGNOSIS ........................................................................... 128

7.1. ESTIMATION OF THE VOLUME OF NECESSARY INVESTMENT................................ ........... 128

7.2. FINANCIAL PLAN........................................................................................................................................ 129

7.2.1. Forecast of income of the managing company.............................................................. 129

7.2.2. Forecast of expenses of the managing company .......................................................... 133

7.2.3. Forecast of final results ..................................................................................................... 134

7.2.4. Forecast of cash flow .......................................................................................................... 135

7.2.5. Forecast of the balance sheet........................................................................................... 139

7.2.6. Forecast of financial indicators ....................................................................................... 142

7.3. ESTIMATION OF INVESTMENT EFFICIENCY................................ ............................... ................. 145

8. SOCIAL AND ECONOMIC AND ENVIRONMENTAL IMPACT OF THE INDUSTRIAL PARK

ON THE REGION ...................................................................................................................................... 148

9. CONCLUSIONS .................................................................................................................................. 150

Figures

Figure 1. Scheme of economic sectors location in the NDR, 2010......................................................... 15


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Figure 9. Insurance scheme of energy power ................................................................................................. 43

Figure 10. Plan of water................................................................................................................................... 44

Figure 11. Operational Process of RAUT JSC ......................................................................................... 50

Figure 12. Organizational chart ....................................................................................................................... 54

Figure 13. Potential resident enterprises of the industrial park.......................................................... 84

Figure 14. Organization of managing company and identification of funding sources .................... 90

Figure 15. Organization of the managing company and identification of funding sources ............. 95

Figure 16. Organization of the managing company and identification of funding sources ............. 98

Figure 17. Organization of the managing company and identification of funding sources ........... 100

Figure 18. Cleaning of buildings in the opinion of RAUT JSC administration .............................. 107

Figure 19. Organization of residents .............................................................................................................. 109

Figure 20. Organization of resident enterprises activity ...................................................................... 110

Figure 21. Types of activity of the industrial park residents ............................................................... 112

Figure 22. Services of the resident company........................................................................................... 113

Figure 23. Structure of organization of the managing company ......................................................... 114

Figure 24. Interaction of residents activities according to the conglomerate model .................... 115

Figure 25. Effects of interaction of resident companies........................................................................ 116

Figure 26. The ideal model of cooperation between the industrial park residents ........................ 116

Figure 27. Dynamics of companys financial results .............................................................................. 134

Tables

Table 1. Description of economic activity. Number of enterprises ...................................................... 19
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Table 9. Category of machinery of RAUT JSC ........................................................................................ 48

Table 10. Managers of hierarchical levels of RAUT JSC...................................................................... 53

Table 11. Number and dynamics of the number of employees, salary fund and salary peremployee in 2007-2009 .............................................................................................................................. 55

Table 12. Employment structure by age .................................................................................................... 55

Table 13. The personnel structure based on qualification level........................................................... 56

Table 14. Indicators of labour efficiency at RAUT JSC ......................................................................... 56

Table 15. Evolution of purchasing raw materials .................................................................................... 58

Table 16. Indicators of RAUT JSC balance sheet................................................................................... 62

Table 17. Loan contracting ........................................................................................................................... 64

Table 18. Structure of receivables............................................................................................................... 65

Table 19. Structure of RAUT JSC debts ................................................................................................... 65

Table 20. Profit and loss ratio ...................................................................................................................... 66

Table 21. Liquidity coefficients.................................................................................................................... 67

Table 22. Indicators of profitability............................................................................................................ 68

Table 23. Management Indicators............................................................................................................... 69

Table 24. Indicators of financial balance ................................................................................................... 70

Table 25. Coefficients of financial stability................................................................................................ 71

Table 26. Define business scenarios of the industrial park................................................................... 74

Table 27. Comparison of the industrial park business scenarios ......................................................... 78

Table 28. Ways of overcoming the risk of scenario 2 .............................................................................. 81

Table 29. Advantageous of the optimal scenario .................................................................................... 82

bl d b


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Table 37. Legal Action Plan......................................................................................................................... 118

Table 38. Features of constructions.......................................................................................................... 125

Table 39. Operational Action Plan ............................................................................................................ 127

Table 40. Structure of investment............................................................................................................. 128

Table 41. Forecasted income of the managing company, th. MDL (TVA included) ........................ 129

Table 42. Evolution of the lease price by types of activities ................................................................ 130

Table 43. Forecast of financial results over the forecasted period (Annex 7)................................... 134

Table 44. Cash flow dynamics, th. MDL (Annex 8. Forecasted cash flow) ............................................. 136

Table 45. Dynamics of balance sheet, th. MDL ........................................................................................ 139

Table 46. Structure of assets ...................................................................................................................... 140

Table 47. Main indicators of profitability ................................................................................................ 143

Table 48.Main liquidity indicators ............................................................................................................ 143

Table 49. Main indicators of financial stability ...................................................................................... 144

Table 50. Main indicators of turnover speed .......................................................................................... 145

Table 51. Determination of investment efficiency (Annex 11. Calculation of investment efficiency )

........................................................................................................................................................................ 145


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ABBREVIATIONS

RDA Regional Development Agency;

LPALocal Public Authority;

NBS National Bureau of Statistics;

EFC Enterprise with Foreign Capital;

IE Individual Enterprise;

JV Joint Venture;

SME Small and Medium Enterprises;

ME Ministry of Economy;

UNDP United Nations Development Programme;

EDN Electricity Distribution Networks;

TER Technical Expert Report;

CDR Central Development Region;

NDR Northern Development Region;

RM Republic of Moldova;

JSC Joint-Stock Company;

CA Commercial Association;

LLC Limited Liability Company;

VAT Value Added Tax;

EU European Union;

UNIDO United Nations Industrial Development Organization;

FEZ F E i Z


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EXECUTIVE SUMMARY

This feasibility study was developed based on state-owned company (76,52%) RAUT JSC, directed

towards industrial production, with an area of 14,6 ha, located in the northern region of Moldova, BaltiMunicipality.

The regional potential supporting the creation of an industrial park lies in its trends and opportunities.

Balti Municipality is the second most developed industrial pole in the country after Chisinau. This

allows preconditioning of sustainable industrial activities, which will be carried out within the

industrial park. Its industrial attractiveness and developing performance is viewed through the prism

of investment in the region, these being 34% in industrial sectors.

Based on the sector and region specifics and specialization, industry involves 35% of working-age

population, which currently makes up about 70%. Its professional qualification can be reflected in the

activities, which will be carried out within the industrial park, being attracted by high work conditions

and motivating wages. However, the potential of qualified people in the region and the existence of

institutions of higher education with technological and engineering profile support activities in the

industrial park involving experts specialized in this field.

Commercial interactions between the entrepreneurs of the region are realised due to available

communication nodes, particularly the intra-regional transport networks that are part of the

municipality roads, including the railways. Geographical proximity to the EU leads to acceleration of

the investment process.

The results ofRAUT JSC analysis emphasise the need to reorganize its operational activities throughtechnical organization. The obtained bivalent effect influences both the creation of the industrial park

and residents who will work within the available spaces, as well as RAUT JSC, which will makeefficient their production activities with direct impact on costs. At the same time, the ability to

organize the companys activity based on bureaucratic management standards do not allow it toundertake activities leading to peripheral value and to consider the company as a system. Therefore,

the industrial park should be managed by a legal entity created by RAUT JSC rather then itself.

The analysis on the region and of RAUT JSC identified following the direction of the industrial parkdevelopment was identified: parks activity focused on industrial production with additional servicesincluding the activities of a Business Incubator. In order to ensure their successful realization,

investments are needed in the park infrastructure. The most appropriate source of funding the

industrial park is that one making RAUT JSC to sell a part of its assets to subsequently invest in re


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from 24,8 million MDL in the first year of the project launch up to 81,05 million MDL in the 20th year.

This is positively appreciated being determined by the growth of sales revenues with a higher rate

than the increase in cost of sales in 20 years of forecast.

The implementation of the project will generate effects for both RAUT JSC and for industrial parkresidents, as well as effects on the region and on the country. Creation of the industrial park based on

the identified model will have a positive social and economic impact on the region efficiently using the

potential of its resources, by obtaining related benefits boosting the economic growth of the country.

Finally, it is concluded that the project on creation of an industrial park on the territory of RAUT JSCwith a predominant industrial activity, will have the desired effect in conditions of observing the

direction of activity scenario, proposed action plan and the amount of investment.


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1. INTRODUCTION1.1. DESCRIPTION OF THE PROJECT IDEA AND OF THE INDUSTRIAL PARK CONCEPTION

The project aims to create an industrial park of the territory of RAUT JSC in Balti Municipality,which is currently operating at a minimum production capability, having fixed assets and unused

buildings.

Balti Municipality is the most developed locality in the Northern region of Moldova, which has a

potential of industrial development, including the opportunity to create an industrial park on the

territory ofRAUT JSC, which most capital is owned by the state. Effects of creating an industrial parkon this territory will enhance the development of industrial enterprises in the region.

The opportunity of creating industrial parks in the Republic of Moldova consists in the need for

industrial development of the economy able to lead to the optimization of production costs, to achieve

production and quality competitive on outlets, etc. and to this end the acceleration of investment

processes in the country is required. Thus, the industrial park is an effective tool for national and

regional economic growth through its impact on development of export-oriented production and

development of domestic consumption in the country.

According to the Law on industrial parks no.182 of July 15, 2010 the industrial park is a defined

territory having technical and production infrastructure, involving economic activities, mainly

manufacturing, provision of services, use of scientific researches and/or technological development in

a regime of system-specific facilities aimed at using the human and material potential of a region.

The decision to create an industrial park on two territories of RAUT JSC, i.e. on an area of 9,8 ha, istaken in accordance with the results of the feasibility study carried out in accordance with the Law on

industrial parks.

The opportunity of creating the industrial park is based on the social and economic needs of the

Republic of Moldova and the need to use state assets.

The creation of the industrial park on the territory ofRAUT JSC has the following specifics:

Creation of an industrial park on a territory whose area allows large-scale industrial activities

Existing infrastructure and assets intended for industrial production and storage, facilitate

activities within the industrial park.

Existence of businesses able to act as resident customers of the industrial park


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1.2. GOAL AND OBJECTIVES OF THE STUDY

The goal of the feasibility study on creation of an industrial park on the territory of RAUT JSC is toargue the technical, economic and legal viability of this project. The objectives of the feasibility

study is to confirm the opportunities of creating the park in accordance with the positive social,

economic and environmental impacts on region development; the possibility of developing economic

activities in the region and attracting residents in the park; the existence of human potential in the

region necessary for park activity and the existence of regional infrastructure necessary for park

business.

They derive from the general purpose and refer to:

establishment of the concept of industrial park and indication of the types of the planned

activity;

assessment of the social, economic and environmental impact of the industrial park on

development of the region;

description of economic activities of the region and possibility to involve residents in the parkas well as human potential of the region necessary for the park activity;

diagnosis of the regional infrastructure necessary for the park activity as well as the condition

of technical and production infrastructure which shall be connected to the industrial park;

delimitation of the site and industrial park configuration;

determination of the action plan for industrial park creation;

estimation of investment necessary to create the park and funding sources; as well as financial

forecasting for activity of the managing company.

The objectives of creating the industrial park

attracting domestic and foreign investments;

establishing competitive industrial sectors based on modern and innovation technologies;

development of economic activities in line with development opportunities specific to the

respective zone, including more efficient use of public property;

development of small and medium enterprises;

creating jobs within the industrial park and ensuring equal access of all citizens to the activity

carried out in the park;

human resources development by improvement of quality of training within the park;

taking over operational practices of foreign companies in manufacturing of mechanical

engineering parts


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The average recorded number of employees as of January 1, 2010 made up 977 people.

The feasibility study involves analysis of the following components:

Business profile;

Study of interior and exterior infrastructure;

Description of buildings, machinery and equipment;

Technological and operational diagnosis;

Companys staff policy;

Analysis of marketing policy;

Economic and financial diagnosis of the company;

Analysis of options for the reorganization of production and administration spaces.

1.4. OVERVIEW OF THE ELABORATING COMPANY

The feasibility study has been developed by ProConsulting LLC which has operated on the consulting

market of the Republic of Moldova since 2003. The company products portfolio refers to:

consulting in financial management;

consulting in strategic management;

consulting in investments and fund-rising;

cusiness planning;

trainings and workshops; insurance and real estate assessment.

Contact information. MD -2004, 23/9 Mitropolit Petru Movila St., Chisinau municipality, Republic of

Moldova. Tel./fax: +(373 22) [email protected]

Web:www.proconsulting.md

Team of consultants involved in the development of the present study:

- Palade Anatol - Project Manager.

- Stratan Dumitru- Strategic Management Consultant.

- Lungu Nicolae Senior Consultant, Financial Management.

- Vascan Grigore - Consultant in technical issues and restructuring.
mailto:[email protected]:[email protected]:[email protected]://www.proconsulting.md/http://www.proconsulting.md/http://www.proconsulting.md/http://www.proconsulting.md/mailto:[email protected]


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Within the development of this feasibility study, a great number of tools and techniques, depending on

the stage of the project sustainability, were used.

Data collection. For this stage the team of consultants have developed a diagnostic analysis of

the region and ofRAUT JSC using the following methods:

survey method;

interview method;

observation;

analysis of internal and external reports;

investigation of statistical sources: empirical methods, science-based methods.

Elaboration of project. Substantiation methods are numerous, among them the most used

were:

forecasting methods: extrapolation of trends using statistical methods and analytical

methods of studying the market, strategic and operational methods of diagnosis;

SWOT analysis;

financial modelling methods;

strategic modelling methods;

methods of scenario building.


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2. ANALYSIS OF THE REGION2.1. ANALYSIS OF BUSINESS ENVIRONMENT

The proposal to create an industrial park on the territory ofRAUT JSC, located in Balti Municipality -part of the Northern Development Region (hereinafter NDR) is analyzed in terms of regional trends

and the situation in RAUT JSC.

2.1.1. Sectoral analysisThe region has a relatively developed industrial potential. The main industrial agglomerations,according to data of 2007 are: (a) mining, (b) manufacturing of clothes, dressing and dyeing of fur; (c)

production and distribution of electric power, gas and hot water, (d) food and beverage; (e)

production of medical, precision and optical equipment and tools. Over 50% of the industrial potential

is concentrated in Balti Municipality (See Figure. 1).

Figure 1. Scheme of economic sectors location in the NDR, 2010.

Meat processing

Oil manufacture

Tobacco processing

Manufacture of sugar

Oil storage

Chemical industry

Machinery manufacture

Asphalt manufacture

Manufacture of dairy products

Manufacture of ready made clothes

Canning, manufacture of goods and non alcoholic drinks

Manufacture of wood and furniture

Manufacture of ready made clothes

Heat and electricity meters Metallurgicalindustry


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Agriculture - agro-industrial sector.

The agro-industrial potential of the region in early 2010, consists of 51 production cooperatives, 25

companies limited by shares, over 530 of limited liability companies and over 90 thousand registered

individual farms and enterprises.

Although Balti Municipality is an urban locality, it has a small agricultural sector, located in both rural

localities of the municipality (Sadovoe and Elizaveta). Their main specialization is cultivation of

cereals, especially wheat, and vegetable cultivation, but in recent years for most crops the city gets

yields lower than the adjacent districts. The livestock sector is virtually absent, the main part of the

total volume of animal products being produced in households. The agricultural sector is poorly

integrated in networks of suppliers of food businesses in the municipality relying more on suppliers of

adjacent districts.1

Agriculture is not a strategic sector of Balti Municipality. The sown area for the analyzed period

January - June 2010 made up 1013 ha, with the lowest share of the region and representing 94% as

compared with the same period of the passed year. The highest share of sown area is that one under

sunflower, which determined the activity of enterprises in oil production and marketing.

Geographically the slow development of agricultural sector is quite unfavourable for economic

entities in carrying out economic activity in this area, thus the use of resources will be much more

effective.

Industry.

With good traditions in many branches, industry is the main sector of the economy of Balti

Municipality. Although the profile and the capacity of the sector have changed essentially from the

Soviet era, the municipality still retains a number of businesses, which previously served as areference model. Many of them proved to be economically viable, but their management is not

necessarily one of the highest levels of performance. The presence of many large industrial enterprises

is a good precondition for development of extended value chains, with positive impact on small and

medium enterprises sector in the municipality, but also on those of the NDR as a whole. In 2006-2008,

industrial production growth in Balti (+4% annual average rate) was much stronger than in the

country as a whole (annual average rate of -1.6%). But delays in restructuring many industrial

enterprises and in inefficient restructuring of them have said their word, most enterprises operatingwith a productive capital physically and morally depreciated. In fact, many enterprises do not use

even half of the installed production capabilities. Food and beverage is the main industrial sub-sector

(represented, for example, by oil production at "Floarea Soarelui" JSC, the production of cognac at

"Barza Alba" JSC and dairy products at "Incomlac JSC) and is attractive for investments, showing anumber of competitive advantages including proximity to the raw material relatively cheap and

F ibili d i f h I d i l P k h i f JSC R B l i


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collectives of those enterprises, but that led to the fact that the main part of the added value created in

light industry does not remain in the municipality, but migrates (i.e. the word "migration" and not

"export" of the value added is the right one).

In terms of industrial value, over 50% of products of the region are concentrated in Balti Municipality,the industrial production value in January-June 2010 made up 1,300 million MDL. This registered a

slight decrease as compared with the same period of the previous year in the context of crisis in

Moldova. The industrial output value made up 99,3% as compared with the same period of the

previous year.

Services.

Although the service sector in Balti Municipality is more diversified as compared with adjacentdistricts, it can be said that in the municipality it is still immature. In the total turnover of services

predominant are the services rendered by population, an essential share is constituted by public

services (such as utilities). But the sector of public services rendered to population is quite strong and

is represented by a large number of companies. A negative side is that for an economic and

infrastructural node as important as Balti Municipality is, the sector of services provided to businesses

in the municipality is very poor, particularly the logistics, storage, marketing, consulting, information

services etc. the number of companies providing services to agricultural households fell from 7 in2004 to 4 in 2008, reflecting both a difficult situation of the agricultural sector in the NDR, as well as

lack of policy incentives for the development of the sector of agricultural extension. By contrast, the

number of companies operating in the real estate sector increased from 38 in 2005 to 71 in 2008.

However, investments in the services sector is an attractive option, given the fact that in long-term

predominant is the trend of increasing citizens' welfare (even very uneven), and manufacturing and

agricultural companies will need to purchase more and more services necessary to remain

competitive.

According to the data presented by the National Bureau of Statistics, the value of services rendered to

population in 2008 made up 764,108 million MDL that is 18,7% more than in 2007.

Transportation.

In January-June 2010, freight transport by road made up 241 thousands tons or 8,1% more than thatof the same period of 2009. This increase is mostly due to the level of industrial development and

secondly because of the quality of roads in the municipality. Statistics of passenger transport realized

with buses and minibuses during January-June 2010 showed 4,119 thousand persons, decreasing by

11% as compared to the same period of the previous year. The report of direct proportionality

b i d i d h i l li i f h d l f b i

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"Balti" FEZ is 25 years (2010-2035). Currently administration plans to extend the zone on the basis of

"Moldaeroservice" company for new investment projects. This will give residents spaces with an area

of 60,000 m2 for offices, warehouses and production facilities. 2

The main goal of creating "Balti" Free Sub-Zone is to attract investments and advanced technologies,create new jobs, new production capabilities in the field of mechanical engineering and parts thereof,

wide the export potential, solve a number of social and economic problems.

According to the Government Decision "On the transfer of real estate", No. 983 from October 19, 2010,

it is foreseen to transfer a land lot with an area of 136,49 ha to the Administration of "Balti" Free

Economic Zone of which 110 ha are used for opening new sub-zones, and 26,49 ha to serve the free

zone activities.

In general, the business support infrastructure is relatively developed. There are 13 operating

branches of commercial banks in the city. Along with these, there is a microfinance organization and a

savings and loan association. In 2001 a business incubator ("Impulse") was created, but the services

rendered by it are rather logistics (providing space for rent), than small business incubation and

extension. Also in Balti Municipality there are 3 business associations and 4 centres for training and

consulting.

Potential resources for the industrial park

Given that the situation in the industrial sector is mainly determined by the activity of manufacturing

enterprises, and traditional primary industries are represented by food, light industries, construction

machinery, construction materials manufacturing, electrical equipment, development direction of the

industrial park through its residents could be economic entities carrying out activities mentionedabove.

The business support infrastructure in any region increases the likelihood of attracting investment. So,

the direction of potential industrial park may be that of creating a business incubator within its

territory and provision of an area for potential FEZ status park.

Benefits expected for Balti Municipality

Use of the above mentioned resources within the industrial park will involve:

Increase in the number of local economic entities oriented toward industrial production;

Satisfying local demand and customer needs;

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Combinatul de piine din Balti JSC, Moldagrotehnica JSC, Articole din beton armat JSC, CMC Knauf JSC, Flautex JSC, Baltaneasca JSC, Mioara JSC, RAUT JSC.

Based on the form of ownership, in 2010 there were 8552 enterprises, of which:

Private Property 6010;

Public Property 162;

Joint ownership without foreign participation 36;

Joint participation with foreign ownership 24;

Foreign Ownership 97;

Other property (collective, public) 2223.

The business environment in Balti Municipality is attractive for foreign companies, fact confirmed by

statistics of the first months of 2010, which show that there were 97 companies with foreign capital.

Table 1. Description of economic activity. Number of enterprises

Activity of economic entities per enterprise size and years

Balti Municipality, Number of enterprises. (The unit of measurement is indicates in the name of value)

Large Medium sized Small Micro



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higher cost efficiency than large companies in the municipality. So, the 48 large companies recorded

sales income in the amount of 5,506 million MDL, obtaining a profit before taxation of 118 million

MDL. Compared to 2008 large enterprises had lower sales income in 2009. In 2008 they made up

6,721 million MDL. As noted, both large companies and SMEs had a decrease in income from sales in

2009 compared to 2008.

Table 2. Description of economic activity. Income from sales

Activity of economic entities per enterprise size and yearsBalti Municipality, Income from sales, th. MDL (The unit of measurement is indicates in the name of

value)

Large

enterprises

Medium sized

enterprisesSmall enterprisesMicro enterprises

National Statistics Bureau

The economic landscape of businesses by type of activity shows that few companies carry out their

activity in agriculture, forestry, hunting and fishing. The highest percentage of businesses is engaged

in wholesale and retail.

Potential of resources for the industrial park

The analysis of business activity in Balti Municipality is a base for the idea of institutional encourage

and support of industrial conglomerates through foreign and local residents.



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y y y J ,

Table 3. Distribution of employment by type of activity

2006 2007 2008 2009

Agriculture 796 597 572 638

Industry 13 896 14 615 15 254 13 151

Constructions 1 758 1 766 1 701 1 607Trade 2 463 2 343 3 346 3 845

Transport and communication 4 374 4 192 4 268 4 043

Public administration 1 799 1 846 1 798 2 094

Education 5 131 4 750 4 679 4 702

Healthcare and social assistance 5 073 4 808 5 062 5 188

Other types of activities 2 322 2 186 2 204 2 243

Source: Prepared by authors

The remuneration of employees in Balti Municipality is the highest in the region. In January-June 2010

the average monthly salary made up 3032 MDL with a growth rate of 107 compared with the same

period of the last year.

2.2. ANALYSIS OF INVESTMENT CLIMATE

Balti Municipality enjoys a relatively developed infrastructure compared with other towns. This, along

with the status of economic and administrative capital of the north, contributed to attracting

investment. During the years 2005-2008 Balti Municipality received a continuous flow of investment

both as loans from affiliates, as well as contributions to the authorized capital. The balance of foreign

investment per capita in 2008 made up 3154 MDL, well above the regional average of 931 MDL.

In Balti Municipality investments per capita decreased by about 47%. The explanation of most acute

investment vulnerability of Balti and Chisinau municipalities in 2009 is that the financial crisis has hit

especially the residential real estate market, which enjoyed most interest of the main investors in the

anti-crisis period. However, by 2008, fixed capital investment in housing construction saw an upward

trend from 65,7 million MDL in 2006 to 106,4 million MDL in 2008.

In the NDR the largest share in the specific structure of fixed capital investment constitutes were made

in machinery and equipment acquisition, the share of this specific investment being maintained at a

level more or less constant in recent years, while in other regions the share of these investments

declined dramatically. Obviously, this partly reflects the trend of modernization of production

equipment at plants and factories in Balti Municipality.



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Figure 2. Structure of investments by sector

The analysis shows that most investments in Balti Municipality were made in 2008 prior to the crisis

which hit the country as a whole.

Most attractive sectors for investment are:

Food industry;

Logistics and International Transport;

Sector of services rendered to population;

Milk production in some model farms in both villages of the municipality;

Import and supply of metal necessary for mechanical engineering;

Development by the mechanical engineering of new products based on non-traditional

materials (plastic, carbon, etc.).


The facilities provided by the industrial park will stimulate local and foreign investment which will

Healthcare and social assistance

EducationPublic

administratio

Real estate transaction

Financialactivities

Transport and

communication

Hotels and restaurants

Trade Construction

Energical power, gas and water

Processing industry

Agriculture

A riculture

Source: National Statistics Bureau



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2.3. ADMINISTRATIVE AND TERRITORIAL ORGANIZATION

From the administrative point of view, Balti Municipality includes 3 localities, with a total area of 79.2

km2

.3

The city is located at 138 km to north from Chisinau, and

neighbores Falesti, Glodeni, Riscani and Singerei, which are

situated at a distance of 20-40 km.

Balti Municipality is located on the banks of Raut and Reutel

rives, which determine its complicated topography. Raut

River crosses the city north-east to south-west, and Reutel

River - from southeast to northwest, which has 17 km

length. The city is also crossed by Copaceanca and Faminda

rivers. All rivers belong to the basin of Nistru River.

The development and arrangement of the city is

conditioned by water, terraces and roads that connect the

sectors of the city and the city with other localities of the

country. The repeated floods of water of Reutel and Reutrivers revealed the need to change the direction and the

depth of river bed in the city by creating artificial lakes,

water - race and recreation zones.

The urban area covers 43,5 km2 and includes only Balti. The rural area is divided into two rural

communes and covers 35,7 km2. The communes have 2 localities Sadovoe and Elizaveta.

The real estate fund of Balti Municipality, which consists of all residential premises, regardless ofownership, including houses, specialized houses (hostels, boarding houses for invalids, houses for

veterans, lonely elderly people and others), apartments, service rooms and other residential rooms in

other buildings suitable for living, make up 2563,916 m2. The population of Balti Municipality makes

up 148156 persons, which indicates the presence of a diverse labour force of various qualifications

and specializations.

Balti is the third largest city in the country and an important industrial center, which includes national

and international companies. The existence of a free economic zone on the territory as well as thepotential for expansion of industrial sectors is a factor in attracting strategic investment. The

municipality is an important railway junction and has an airport.

The legal and territorial existence of RAUT JSC in Balti Municipality, provides the opportunity toenjoy the region's transport links having a direct connection with those of Balti Municipality (See



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Figure 3. Geographical location ofRAUT JSCin Balti Municipality

Source:www.wikimapia.org


Balti Municipality is the second largest city after Chisinau in terms of population and is the main

economic and industrial center in the north of the country, which has a significant production

potential and enough storage spaces, a railway junction, enterprise of heavy car transportation.

Creation of the industrial park on the territory ofRAUT JSC is an opportunity for businesses in the

region due to its specificity.

The physical and geographical location of Balti and its territorial area, existing facilities, remoteness

from Chisinau municipality and from the country's borders is also an opportunity to argue thedevelopment of industrial infrastructure through the creation of industrial park and concentration of

some industrial business centres. The physical access to different markets and industries enables the

creation of a park structure having diversified industrial activity.

2.4. ANALYSIS OF THE SOCIAL AND ECONOMIC ENVIRONMENT

2.4.1. Analysis of the demographic situationIn Balti Municipality, as of January 1, 2010, 148156 people were registered on an area of 7801 ha. The

population density is Balti Municipality made up 1899 inhabitants per km2. Of the total population

68081 were men and 80075 women

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2009 showed a positive natural growth in Balti Municipality. During the year there were born 1627

people and 1468 people died. There was a positive trend of the population growth rate because for

previous years the population growth rate was negative: in 2008 it made up 94 persons, in 2007 - 105

persons, in 2006 - 169 persons.

An important indicator of social and economic situation of the municipality is life expectancy at birth.

This has seen an upward trend compared to previous years. In 2009 compared with 2008, the average

life expectancy at birth was 69 years, while in 2008 - 69 years, and in 2007 68 years.

Figure 4. Stable population of Balti Municipality

Source: National Statistics Bureau


The existence in the region of labour force and its availability allow to create an industrial park, which

will be provided with qualified personnel with high labour productivity. Currently in Balti Municipality

there is an outlet for industrial products. Given the fact that consumers have different preferences and

different needs for different types of products, a diversified business of the potential industrial park

will represent a risk in terms of market demand.

2.4.2.

Analysis of labour force

The labour market in Balti Municipality is in a transient process and generates strong structural

regional, occupational and professional imbalances. Promoting reforms that took place and continues

to make quantitative and qualitative changes in the employment sphere, which is characterized by

decreasing the number of employed people in the national economy increasing the number of persons



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Another indicator showing the degree of stability of employees and their motivation is the index of

employee mobility. For the same period, in Balti Municipality 9200 people were employed, which is

24,6% more than the average number of employees in the territory of Moldova. At the end of 2009

12,000 people were dismissed. The employee mobility index recorded a negative result of 2500

persons.

In early 2010 the number of unemployed people in Balti made up 3614 people, which was an increase

compared to the same period of the previous year (3418 persons). However the number of

unemployed people in Balti Municipality, has seen a decrease compared with 2007, when most people

were unemployed, amounting to 4218 people.

Of the total number of employees, 58,7% of employees work in large enterprises, 1,9% in small

enterprises and 13,2% in medium sized enterprises, while the remainder in small enterprises. Large

companies are those that contribute to job creation and their maintenance.

According to the official information, labour market of Balti Municipality is the most exposed to the

risk of accidents in the region. Of 91 victims of work accidents in the Northern region, 45 were

recorded in Balti, of which two were fatal.

The employment of population in early 2010, in thousands, is presented in the table below:

Table 4. Structure of population in Balti Municipality, thousand people

No. Indicators 2006 2007 2008 2009

1. Total population 128 127 127 127

2. Economically active population4 87 86 90 90

3. Population employed in economy 5 44 42 42 45

5. Inactive population 41 41 37 37

The types of activities of employment are as follows:

Figure 5. Employment structure, 2009

A riculture

Constructions

Transport and communication

Education

Other types of activities

Industry

Trade

Public administration

Healthcare and social assistance



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In order to determine the potential workforce available for the industrial park, the alternative of

persons existing at a radius of 30 km from the territory ofRAUT JSC, which will enable the industrialpark:

Figure 6. Geographical demarcation on a radius of 30 km

Source:www.point.md/map.Authors presentation

In this radius five districts were defined: Floresti, Drochia, Riscani, Glodeni, Singerei districts. The

geographical demarcation within 30 km from the industrial park, highlights the following strategicpriority locations for the region: Singerei, Bilicenii Vechi Village, Alexandreni Village, Elizaveta Village,

Sadovoe Village, Floresti, Drochia, Pirlita Village, Recea Village, Grinauti Village, Petreni Village,

Corlateni Village, Glodeni, Glinjeni Village, Marandeni Village. These localities were selected due to

their location on the national routes of RM. The overall availability of the population is shown in the

table below:

Table 5. Availability of the overall population within 30 km of BaltiLocality District Working age people

Singerei Singerei 9028

Bilicenii Vechi Singerei 2353

Alexandreni Singerei 4396

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Based on calculated data it was found that on the radius of 30 km from the industrial park there are

66343 available persons that can be used as available capital, bringing value to the industrial park.


The existance in the region of an intellectual potencial and of qualified persons in the industrial fieldssupports the creation of industrial park that is based on a qualified workforce and work experience in

large enterprises and plants. Also, due to the fact that most of the unemployed people are qualified

individuals who have work experience and have become the result of major restructuring of state

enterprises, there are workforce able to bring value to the industrial park. Also the workforce of the

industrial park would be organizationally effective, because most employees of the region work in

enterprises with a large number of staff whith whom there are systemic management interactions. The

trend of employing people in the labor market shows the potential and the development perspective ofnew businesses, which directly falls within the scenario of creating an industrial park in Balti. The

creation of the industrial park will allow essential revive of the entire economy of the region as well as

full use of the potential of labour force and its qualifications and experience.

2.4.3. Analysis of people welfareThe average monthly salary of employees of the NDR in 2008 made up 2089 MDL, which represents

82% of the average salary in the republic. The average monthly salary of an employee in Balti

Municipality made up about 2760 MDL or 109% of the average salary in the republic. During 2005-

2007 employees labour productivity increased, as well as the nominal salary. In 2007-2008 theproductivity had a downward trend and wages continued to grow. Growth of monthly salary in

previous period made up 107%. The highest salary was paid in financial activities, and the lowest - in

agriculture making up 1336 MDL. In industry, the average salary made up 3039 MDL.

Most of the household income consists of salary earnings (30%). A significant (23%) part is made up

by the remittances and the income from agriculture (18%). It shall be noted that the average salary of

men is over 27% of women's average salary.6

An indicator of the category of social and economic indicators, representing people welfare is the

number of large families below the poverty line. When the crisis occurred, in 2008 it recorded the

highest share, and 345 families were below the poverty line. In 2009 there were 312 families and in

first six months of 2010 - 188 families of this category.

2.5. ANALYSIS OF PHYSICAL INFRASTRUCTURE



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Road communications

In Balti Municipality there are 3 water basins, the largest being Chirpicinoe Lake which covers an area

of 40 ha and has a capacity of 1,2 million m3 of water. The other two lakes are for recreational

purpose, the first being used for fish breeding.

2.5.2. Analysis of transport infrastructureThe NDR has access to air, road and rail transport. The NDR is the only region that has air access

through two airports - Balti International Airport (Ledoveni) and Marculesti International Airport.

However, both airports are used to the minimum capabilities offering cargo transport services, being

mostly domestic flights, and occasionally external flights. Balti Airport (Ledoveni) is a civil airport, and

Marculesti (Floresti District) is a mixed one (military and civilian). Both have an international airport

status. Balti airport is certified and opened for passenger and cargo, but now is used only for singlenon-scheduled flights.7

Intra-regional road network. The distances between the extremes make up about 170 km north-south

and about 130 km west-east direction. On average, districts in the NDR are situated at a distance of

55,3 km from Balti. Public roads has a length of about 24,1 km., of which national roads have a length

of 24,1 km, of which roads with hard surface make up 24,1 km.8 Also, in Balti Municipality there are

376 streets with a street length of 221 km.

Rail transport. The density of railway networks in the NDR is the lowest in the country and makes up

2,1 km per 100 km2 being below the republican average of 3,3 km/100 km2. The main railway nodes of

the NDR are situated in Balti Municipality and Ocnita. Through these connections, Moldovan railway

routes diverse and include the following destinations: Russia (Moscow and St Petersburg), Belarus

(Minsk), Ukraine (Kiev, Chernovtsy, Ivano-Frankovsk, etc.). International railway routes are: Chisinau,

Balti-Ocnita-Ungheni (checkpoints and border crossings). Regional routes are the ramifications: Balti-

Ribnita, BaltiGlodeni, Balti-Slobodca and Balti-Cupcini. The presence of railways in the region has anadvantage, since intra-regional rail nodes, Ocnita and Balti has an access route to Ukraine, Russia,

Belarus and the EU.9

Figure 7. Communication routes by road, rail, and river of the NDR

Rail and river communications



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Potential of resources for industrial park

The advantage of Balti location allows some regional B2B activities. The communication nodes

facilitate development of industrial activities based on relations with economic entities in the region,

country and abroad.

The fact that transport infrastructure is developed and roads are of a relatively high quality as those in

the region and even in the country, there is a prospect of different types of vehicles proceeding from

the specifics of the trade.

The availability of a network of intra-regional and international routes as well as of the physical

communication channels such as rail and air access routes, will facilitate connection between business

partners. However, the recent commissioning of the bridge and of the customs point Lipcani-Radautiwill stimulate economic opening of the municipality and towards the Romanian and European markets

and thus will increase attractiveness of the municipality.

2.5.3. Analysis of utility infrastructure

Water supply.

Water supply in the NDR is provided primarily by groundwater abstraction and Prut and Nistru rivers.

In early 2008 the share of localities that had drinking water supply network made up 35,4% showing a

slow increase as compared to 2006. 70% of consumed water is extracted from artesian wells. At the

same time, 80% of water resources do not meet water quality standards. This is caused by outdated

water supply network and outdated standards and technical conditions of water treatment. Balti

Municipality has the largest number of networks of aqueducts in the region. The network of aqueductsmakes up 320 km/100 km2. The Soroca-Balti aqueduct, operating in the region, delivers water to

consumers in Balti Municipality and in the localities of the surrounding area.

Sewerage. Sewage systems in the NDR are poorly developed, the situation is similar to the situation in

the country. In Balti Municipality this indicator is 9 times higher making up 185 km/100 km2.

Currently in Balti Municipality there is a functional state of sewage treatment.

Provision with natural gas.

Provision with natural gas of the localities from the NDR is realized by main gas pipelines of high



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Communications.

Fixed telephony in the NDR is provided by the subsidiaries of state enterprise Moldtelecom. Thehighest degree of telephony is observed in Balti Municipality. In Balti there are 32 telephone stations

per 100 inhabitants , that is the largest share of the region.

The mobile telephony is represented by "Orange", "Moldcell" and "Unite" networks covering with their

services throughout the NDR. While the costs for services are high, according to the data of mobile

operators in the past three years there is a steady upward trend in the number of users.

Potential of resources for the park

The capability of electric power station from the locality park models the intensity of industrial

activities in the industrial sector. However, the availability and provision with natural gas resources,

electricity, water and sewerage activities do not create limitations for the industrial park activity, and

there is no any risk that its functionality is likely to be interrupted because of lack of resources of the

utility category.

2.5.4. Analysis of educational institutionsAccording to the census of 2004, in Balti Municipality the number of people with generally higher

education level (secondary and compulsory) made up 86% (99 736 persons) of all persons aged 10

and over. People with primary education level made up 12% (13 852 persons) and those without

primary education 2% (2 076 persons).

In Balti Municipality there are 6 colleges with a total number of 3548 pupils. In 2009, collegesregistered 831 graduates. Also, in the municipality there are 3 higher education institutions with a

total number of 9552 students at the beginning of 2008/2009 academic year. At the same 2237

persons graduated education institutions.

Potential of resources for the park

The existence in Balti Municipality of an educational infrastructure implies dependence on

productivity and quality offered by resident enterprises of the industrial park. The fact that

educational institutions have developed professional personnel of physical and technological

education, will allow some activities in the industrial park based on rational and optimal design of

mechanisms, tools and machining processes and eliminate defects in measured and used technical

equipment



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3. ANALYSIS OF LEGAL FRAMEWORK3.1. BRIEF ANALYSIS OF LEGAL FRAMEWORK IN THE REPUBLIC OF MOLDOVA

General overview

Moldova's legal system has developed relatively well over the last decade. Moldova moved closer to

the standards of European countries and international organizations, which joined (such as the World

Trade Organization), although it remains a long way to go before the full harmonization of legislation.

Expansion and effectiveness trade of the trade legislation of Moldova has improved but the practical

implementation of the Law remains a major problem. Below the most important positive aspects of

Moldovan legislation are presented aimed at encouraging investors both local and foreign.

Protection of private property

Article 1 of the Constitution of the Republic of Moldova stipulates the supremacy of the rule of law. The

state guarantees the right to private property (art. 46 of the Constitution) and protects property of

Moldovan citizens, foreigners and stateless persons (art. 126-127 of the Constitution). The

Constitution provides that both physical and intellectual illegally acquired property may not be

confiscated, whether the property is deemed lawful. In 2002, out of the Title V, "Tax Administration" of

the Tax Code of the Republic of Moldova a series of articles that infringe the intangible character of theproperty and the character deemed lawful of the private property was excluded. The Law on

privatization provides in article 23 (3), that the state guarantees ownership of privatized property, the

right of the citizens of the Republic of Moldova, foreign citizens and stateless persons to participate in

privatization .

Protection and promotion of investments

In accordance with article 126 of the Constitution, the state provides inviolability of investments ofindividuals and legal entities, including foreign ones. Article 5 of the Law on investments in

entrepreneurial activity stipulates that investors can place their investments throughout the country

and in all areas of business activity under conditions of observing the laws on anti-monopoly,

environment, state security etc. The state provides a full and permanent security and protection of all

investments irrespective of their form. Their investments and facilities can not be discriminated on

grounds of nationality, residence, place of registration, etc., all investors being given equal rights.

Moldovan government provides favourable conditions for the privatization of production entities,

including the possibilities to pay in instalments the price of the privatized entity, which is important

for attracting investors. If an investor wants to launch a completely new business and wants to

acquire land lots being public ownership (except for agricultural and forestry land), the investor must

h fi l 25% f h l d i d h i i b d


i t di t ith t i th t ll t d i ifi t i t t i M ld O t


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main trading partners or with countries that allocated significant investments in Moldova. Our country

has also signed 13 international agreements on avoiding double taxation. Foreign investors have the

Possibility to control investment and local companies, they are protected by international agreements

to protect and insure investments. The government shall adopt the national program of investment

promotion.

The activity of foreign investors in Moldova falls under the Law on investments in entrepreneurial

activity, which establishes equal rights and obligations for domestic and foreign investors.

Manifestation of free economic initiative

The market, economic initiative and competition are identified as the basic pillars of the economy

(art.9 of the Constitution of the Republic of Moldova). The Moldovan Government, local and centralpublic authorities can give instructions to enterprises only within their powers established by law

(art.8 of the Law on enterprises and entrepreneurs). Damages, including lost profit, incurred by the

enterprise following the fulfilment of illegal provisions shall be repaired from the budget, which funds

these authorities. The economic initiative can not be limited under the pretext of its inopportunity and

uselessness. Private contracts are freely negotiated, and shall be registered by notary and legally

authenticated. Land lease contracts are registered with local administration bodies.

Industrial park activity

The process of establishing industrial parks and conditions of the residents activity is governed bythe Law on industrial parks, no. 182 of July 15, 2010, in force since September 3, 2010.

The main objectives of this law (art. 2) are:

- attracting domestic and foreign investors;

- establishing some industrially competitive sectors based on modern and innovative

technologies;

- development of economic activities in line with the area specific development opportunities,

including more efficient use of public property;

- development of small and medium enterprises;

- creation of jobs.

This Law is completed and its provisions shall apply to a number of other laws and regulations,

among which are:

- Civil Code of the Republic of Moldova;

- Tax Code of the Republic of Moldova;

- Law on joint stock companies no 1134 of April 2 1997;


document of incorporation: Articles of Association of "RAUT" JSC of August 18 1995;


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- document of incorporation: Articles of Association of RAUT JSC of August 18, 1995;

- governing body:

a) General Meeting;

b) Company Board;

c) General Director;

d) Audit Commission.

- shareholders:

a) state (through PPA) 76,521%b) "Mega Prime JSC 9,628%c) VasileRosioru 9,401%

d) Individuals 12,946%

Representations and branches noneShare registry - reflects changes in ownership of shares. They were put on auction and were

notapplicants. The shares were put on the BV at least 3 times and were not demanded.

No. of simple shares 7 046 577 with nominal value - 8 MDL

Mandatory and regulated registries (registry: inventory, journal, ledger, purchasing, sales and

control) they exist and are completed.

Organization and activity regulation - the activity is organized properly, but management is not

effective

LITIGATION - insignificant

PERSONNEL - 566 permanent staff: written employment contracts - 83 people; higher education -

108; secondary education - 168; special secondary education - 267, unqualified personnel - 23.

Personal age - young person (up to 30 years) - 0. The lack of young personnel can cause problems

companys development.

Environmental compliance requirements it was has found that environmental compliancerequirements are within the allowable limits.

Conclusions:


accessible connection to technical and production infrastructure of the park to public utilities


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- accessible connection to technical and production infrastructure of the park to public utilities.



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4. OVERVIEW ON THE ECONOMIC ENTITY4.1. COMPANY PROFILE

4.1.1. Brief historyName of company RAUT JSC

Tax Code 1002602000612

Organizational Form Joint-Stock Company

Authorized capital 49 326 039 MDL

State share 77%

Legal address 13 Decebal St., Balti

Municipality

Director Cheaburu Eugen

The company was founded in 1944 as a mechanical plant, in 1951 it was transmitted to the Soviet

Ministry of Navy Industry being reorganized in an enterprise specialized in developing and producing

hydroacoustic navigation, research, measurement apparatus and other special purpose apparatus

(sonar, electronic probes, hydroacoustic buoys), and in 1978 production of consumer goods.

In 1976, on the basis of the enterprise and "RIF" scientific research institute, on the basis of

projections producing apparatus of hydroacoustic navigation, maritime research, high precision

measuremens, RAUT Production Association was organized.

In 1995 through the reorganization of RAUT Production Association and RIF Scientific ResearchInstitute, the open joint stock companies RAUT JSC, EFC RIF ACVAAPARAT JSC, "LOT JSC wereorganized. The company is registered with the State Registration Chamber under the Ministry of

Justice of the Republic of Moldova on August 18, 1995 and is entered in the State Registry under

registration number no.12103291-7, December 8, 2004 the company was awarded and registered in

the State Registry of Enterprises and Organizations under the identification number - tax code IDNO

1002602000612.

4.1.2. Field of activity. Companys products and services


Among the basic products and services of the company, there can be listed:


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Among the basic products and services of the company, there can be listed:

Table 6. Companys products and services

The largest share of the turnover is represented by hydroacoustic navigation apparatus, having a

weight of 80% of sales income. They are sold mainly on the outlets of Russia and India. Consumergoods and services rendered to population make up 20%, the selected market segment is particularly

Moldova. Among consumer goods, the enterprise produces electric heaters, electric ovens, gas cookers.

In the total sales volume, 65-80% is obtained on foreign markets, particularly on the Russian market.

Also, RAUT JSC produces devices for EFC "RIF - ACVAAPARAT" JSC which subsequently are deliveredin the composition of the apparatus in China.

Conclusions:

RAUT JSC product portfolio is dominated by hydroacoustic navigation apparatus, based on thedemand for these products. Meanwhile, local market does not need such products. However, given the

fact the company produces spare parts for mechanical engineering, engineering technologies and

equipment as strategic direction for its development on the local market, this is the practice of

respective activities. And the fact that the company's technological capability to produce such portfolio

of products can also be provided as work carried out within the industrial park, along with the same

specialty companies (production of parts for mechanical engineering).

4.1.3. Companys sizeRAUT JSC enterprise is located in the central sector of Balti Municipality on 3 territories with a total

Product and services Description of products and services

1. Hydroacoustic navigation

apparatus

Maritime industry - sonar NEL-M1, NEL-M5, logs LA-4, Samsit -M

2. Special hydroacoustic

maintenance apparatus

Aviation industry - RGB-41 buoys, RGB-16-2Mi/15, RGB-75A, RTB-93Mi

3. Electrical and gas apparatus for

household

Consumer products: portable electric heaters EPT 1, EPT-2 , stove PNS-2

RAUT-01", electric oven ESP-1, 5 / 220" RAUT "

4. Services: Repair of antennas of the device NEL-M1, NEL-5, Samsit-, MG-518,Production of parts for the needs of SE "Calea Ferata a Moldovei"

Production of equipment for economic entities: cathodic stations for

protecting pipelines SKZ3-0, 6, SKZ-1 , 0, network transformers


Maghitlas JSC 5 000 0,071


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g JSIGUR ASIGUR LLC 8 810 0,125CF EUROPA TRUST JSC 3 250 0,046CF FOND LLC 46 680 0,662Individuals 912 281 12,946

From a historical perspective, in 1995 there were about 10 000 employees working on the territory of

the enterprise. Current trends are quite pessimistic because of fewer orders. And the staff is directly

proportional to the needs of production. Thus, as of January 1, 2010 the enterprise had 2 500 jobs with

an average number of employees of 977 persons including 566 permanent employees.

4.2. ENTERPRISE POTENTIAL4.2.1. Diagnosis and localization of infrastructure

Currently RAUT JSC has three major land platforms located in the downtown of Balti on 13 DecebalStr., with a total area of about 10,69 ha and a land platform located on an area located on 1 Moldova

Street with an area of 3.99 ha, which are located on a large number of buildings.

All buildings on those three land lots are located on an area of about 5,9 ha of the total built area of

14,68 ha and the remaining 8.78 ha is land for construction.

It is noted that the buildings are owned by "RAUT" JSC, EFC "RIF ACVAAPARAT JSC and "LOT" JSC,and the land on which they are located is a public property belonging to the local public authority hall of Balti Municipality.

The territory is fenced with a fence of 3 256 meters of length, 7 entries and exists.


Figure 8. General urban plan


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Developed by ProConsulting LLC, tel./fax: 21-00-89 Page 39

General Urban Plan of RAUT JSC

Surface 1,2



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Conclusions:

The area of constructions and of related land on which RAUT JSC operates is extended andsometimes scattered in terms of its capacity of being used. At the same time, the Law on industrial

parks, article 5, point c, states that the land designed for industrial park with buildings and facilities

located on it, shall cumulatively fulfil the requirement to have an area of al least 5 ha. Given the fact

that the territory ofRAUT JSC exceeds this area, the creation of the industrial park is not contraryto legal compliance.

Given that the third land lot situated on Moldovita Street is separated from the other two land lots,

and its arrangement is difficult and at the same time its potential is not used, the possibility to

create an industrial park on this land is excluded.

4.2.2. Diagnosis and infrastructure of utilitiesExternal engineering water, sewage, gas networks require total reconstruction besides those

electric, which makes up about 23,20 km of air route and 12 intermediate power stations, of which

8 are basic and 4 reserve ones, which can be repaired, being partially unused, but which constitutes

a great potential of about 19 455 kW, which could cover 100% of electricity need within the

enterprise.

Electric power. The enterprise is

provided with electricity through

power transmission lines. There are

four units of electric power

distribution constructed within the

enterprise ( 160; - 29; -28; - 31) with a capacity of 10 KW.The electricity distribution units are

provided with power from "CET-

Nord JSC, Balti electric power stationwith a capacity of 330/110/35/10

KW and P 2 RED-Nord JSC. The

power distribution units 160; - 29; - 28 are located on themainland, and - 31 is located onthe land lot of transport charge. -160 is connected with - 2 RED-



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Aqueducts. Provision with water is carried out through a pipe with a diameter of 63 mm, from the

Apa-Canal" company through a pumping station of the company from 4 water reservoirs (1000 m3,2000 m3, 2x200 m3). The system is used at 70%. The sewerage system is in satisfactory condition.

Other channels of communication. The company has access to the telephone line, to urban

telephone station (24 phones) with access to national and international calls. Internal telephone

communication is done via telephone stations, and the total number of internal telephones makes

up 248, the dispatch service has 25 telephones. The maximum capacity of the internal station

makes up 300 telephone numbers.

Currently the enterprise is not gasified.

In conclusion, provision of the land of RAUT JSC with utilities supporting industrial activity issubject to wear and some of them are unfunctional. Creation of the industrial park requires

investment in remodernization of utilities and solving the problem of their physical wear.


Figure 9. Insurance scheme of energy power


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Insurance Scheme of Energy Power, JSC RAUT


Figure 10. Plan of water


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General Plan of water pumping station, of sewerage and electrical power systems


4 2 3 Technical Diagnosis


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4.2.3. Technical Diagno

Feasability Study Raut_english

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