Strategy in the Russian Agriculture

1. Strategy in the Russian Agriculture Effective Financing as a Key to Success in Agricultural Businesses Perspectives for Agricultural Machinery Deutsche Leasing International GmbH GVM Harald Quante Moscow, 03.03.2010

2. Agenda • Speaker's portrait • Company portrait • Useful methods of sales financing for dealers • Useful financing strategies for farmers and investors • Decision making in financial service provision 03.12.07, Deutsche Leasing plus Partner Master, Folie 2

3. Profile Harald Quante Global Vendor Manager at Deutsche Leasing AG • Responsible for relationship development with manufacturers and dealers of agricultural machinery and equipment worldwide Vita • Born 1962 • Apprenticeship as farmer • University of agriculture in Bonn • Sales manager different sectors of agriculture • Sales manager financing agricultural equipment (Nat West Bank and AGCO Finance) • Since 2007 Deutsche Leasing International 03.12.07, Deutsche Leasing plus Partner Master, Folie 3

4. Company Overview • founded 1962 as first manufacturer-independent leasing company in Germany • German market leader • successful global expansion (19 dependences) • owned by 410 Sparkassen • over 1.650 employees (450 outside Germany) • 7,2 billion € turnover • 5 major business segments: IT, International, Sparkassen & MS, Fleet, Retail/Finance 03.12.07, Deutsche Leasing plus Partner Master, Folie 4

5. Deutsche Leasing International Local knowledge – international expertise. In 22 countries of the world. 03.12.07, Deutsche Leasing plus Partner Master, Folie 5

6. Local Challenges and Limitations in Financing (as of 2009/2010) – example: Russia 6 • Financing at local banks is expensive for importers – interest rate approx. 15 % and higher • Borrowing abroad for importers of internationally recognized credit rating (IFRS accounting and securities Testate) • Decisions concerning credit terms and guarantees will be made in the H/Qs of local banks; due to difficult economic conditions in Russia this was currently associated with significant delays • Capital markets for Russian banks, given the financial crisis are ‚dried up‘; • No Liquidity for the farmers • Result: big decrease in sales of machines 03.12.07, Deutsche Leasing plus Partner Master, Folie 6

7. Contacts with banks • Initialization of contacts at an early stage of business recommendable • Set up of credit lines • Continuous contact care • Always initialize a second bank contact • to be save in case of cancellation • to be save in times of economic crisis • to secure financing solutions for your customers • to get competitve financing offers • to secure further growth 03.12.07, Deutsche Leasing plus Partner Master, Folie 7

8. Demands for high quality dealers • Commercial leader with extensive expertise (Master of Business, Agricultural Engineer, etc.) • Balance sheet management • Controlling (inventory, credit lines, bench-marking, asset/ capital turnover) • Corporate financing and sales financing • Corporate development planning (personnel, financing,…) • Contacts with banks • Contacts with suppliers • Contacts / consultancy with key account customers 03.12.07, Deutsche Leasing plus Partner Master, Folie 8

9. Recent Developments in Machinery Sales • Agricultural machinery business links industry and customer • Exclusiveness of franchises and areas • large area size – few dealers per area • Focus on service quality • Focus on special services • Concentration on good end customer • Developement of advanced services is vital 03.12.07, Deutsche Leasing plus Partner Master, Folie 9

10. Decision making in financial service provision

11. Asset Devaluation and Remarketing Value % • DL has database for more than 20.000 different machines of all industries • the asset value curve is continuously adjusted to the defaults and/or machinery prices realized. • The higher the support of a partner in remarketing is, the higher is our readiness to decide in our partner‘s favour in case of insecurities in enconsumer business. Difference: Legal costs Interst costs Transport Repair Market price Value for the bank Month 03.12.07, Deutsche Leasing plus Partner Master, Folie 11

12. Financing requirements of farmers Land and buildings long term credits Machinery and equipment medium term credits Production costs (seeds, fertilizer, petrol) short term credits 03.12.07, Deutsche Leasing plus Partner Master, Folie 12

13. Asset Devaluation and Remarketing • Loan 1: Value of the credit is not backed by the value of the Machine • Possible losses are evaluated based on asset values and remarketing experience of the financer. • A typical strength of an experienced object financer like Deutsche Leasing is its fair evaluation and strong expertise that facilitates remarketing. The customer profits from this. 03.12.07, Deutsche Leasing plus Partner Master, Folie 13

14. Points to discuss • Special programms for the need of Russian farmers • Developement for price of second hand machines • Support of dealer and producer in case of default 03.12.07, Deutsche Leasing plus Partner Master, Folie 14

15. Thank you. Questions?