Interkros Center: Sberbank is not going to satisfy our needs

The editorial Board understands that due to the unwillingness of Sberbank to satisfy the manufacturer’s needs and the inaction of the Federal Ministry of agriculture, the company is in a difficult situation. Despite the harsh rhetoric in the first article, The DairyNews would like to support “Intercros Center” and get a deeper understanding of the situation, in particular, the company's relationship with Sberbank, the financial burden of the company, and, accordingly, the reasons that prompted the company's management to make tough statements at the end of last week.

The editorial Board received a comment from the farm, which indicates important facts necessary for a complete picture.

We publish the appeal of the company without changes: 

01.05.2020, your editorial Board published information about the activities of the company "Intercross Center", which has been operating in Tula region since 2011.

We would like to comment and correct the author in those places where they made mistakes due to a shallow study of the situation. 

1. The company has never blackmailed and did not intend to blackmail the Administration and the Ministry of agriculture of Tula region in order to extort support for the company. The company has developed business, constructive relationship with both the Administration and the Ministry of agriculture of the region.  

2. Regarding the relationship of the company with the lending Sberbank of the Russian Federation, I would like to note that they are not very smooth, since the decisions made by the Bank to LLC Intercros Center lead to its imminent bankruptcy. The author of the appeal to slaughter animals is the Bank, commenting that if the company is in a difficult situation, it has the right to slaughter part of the livestock to fulfill its obligations to the Bank, and our response was that if we are pushed to the extreme and it becomes necessary, it will be done in public.

3. The opinion expressed by the author of the article that a business that is not able to bear the cost of paying interest at the rate of 1.75% per annum has no place in the market. This erroneous judgment was formed by the author of the article due to ignorance of the specifics of the implementation of our project. They are as follows: 

-  the company has incurred part of the expenses for the construction of livestock complexes that are not subject to subsidies and pays interest in the amount of 50 million rubles annually, independently. And the additional 1.75% interest rate on the loan is another 50 million. Together, these expenses amount to about 8% of the company's total revenue, which is quite significant. 

–The 1st batch of animals was received in critical condition, with a high degree of poisoning, due to the fact that the transport vessel's manure removal and ventilation systems failed. Expensive medicines that were purchased for the treatment and restoration of the herd were not included in the planned expenses of the enterprise. 

- under-financing of the project by the Bank in the amount of 500 million rubles. This fact led to an increase in the construction time of the complex and, as a result, a decrease in the company's revenue. 

- the lack of gasification of the complex significantly affected the cost of production. Until now, the company is forced to use only electric power. According to the signed investment agreement, the regional Administration assumed the obligation to bring gas to the complex, but for 10 years the obligation cannot be fulfilled due to the fact that Gazprom does not have funds for the reconstruction of the Yasnogorskaya GDS. 

Also, I would like to say that on the date of signing the loan agreement, Sberbank had a rate of return on our transaction in the amount of 2% interest (the loan rate is the refinancing rate). Today, taking advantage of the fact that the Central Bank of the Russian Federation reduces the key rate, banks are actively reducing deposit rates, while forgetting to reduce the credit burden for both businesses and individuals, while receiving excess profits. On the example of our company, we can say that the difference today between the key and credit rates is 5.75%, which is almost 300% higher than the original indicator of the Bank's profitability (2%). In addition, banks deliberately underestimate the value of collateral in order to keep the borrower in complete bondage and dependence.

The author of the article, as a specialist in the dairy industry, probably knows that the profitability of dairy producers is no more than 20 %, and even from the revenue of 1.5 billion rubles the profitability is 300 million. At the same time, Sberbank needs to repay the loan amount of 300 million per year, about 50 million of interest rate, which is not subsidized, and an additional 1.75% (50 million) of the loan rate. In total, the annual repayment amount is 400 million rubles, with a profitability of 300 million rubles. Today, the real situation looks like this. 

Against this background, understanding the complexity of the situation, Sberbank still does not make concessions. At the same time, it is ready to assign a loan at a discount of 280 million rubles to any potential buyer, but not to support the enterprise, which would cost the Bank 170 million, instead of 280.

UPD: As it became known after the publication, a meeting of the Sberbank credit committee, at which a decision will be made on the fate of “Intercros Center”, will be held on May 7.

The DairyNews will monitor the situation and tell about it on the pages of the publication.

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