Cbw 87 by Caucasian Business Week

DISTRIBUTED FREE OF CHARGE

BUSINESS WEEK WWW.CBW.GE caucasian business week www.facebook.com/CBW.ge Partner News Agency

February 16, 2015 #87

February 16, 2015, Issue 87

caucasian1 YOUR EUROPEAN HOUSE

BE INFORMED, DO BUSINESS

GEORGIA

Archi Group in All Districts cts of Tbilisi

NATAKHTARI SALES VOLUME REACHED 100 MILLION LITERS IN 2014

Pg. 2

BEELINE – ENGINE FOR MARKET COMPETITION

FOODPANDA ACQUIRES COMPETITORS IN 7 ASIAN MARKETS

WORLD NEWS BACK TO THE FUTURE FOR THE US DOLLAR

Pg. 8-9

4G Internet is Our Major and Populationoriented Social Investment

Pg. 7

Tbc Bank Summarizes Results for 2014 VAKHTANG BUTSHKHRIKIDZE TBC Bank’s CEO Pg. 10

GREECE UNCERTAINTY TO SUPPORT US DOLLAR BULLISH TREND

ast week until the release of NFP data on Friday, it looked like a corrective pullback for the US Dollar might have just been triggered on the back of widening US trade deficit and modest pace of growth as reflected in ISM manufacturing PMI. Pg. 13

LIVO - Natural Juices of Fruits from Georgia IRAKLI LEKVINADZE LIVO’s director

Pg. 4

KHUDONI HPP – PROJECT OF THE CENTURY Pg. 5 FOR GEORGIA

REAL ESTATE

caucasian business week

February 16, 2015 #87

YOUR EUROPEAN HOUSE Archi Group in All Districts of Tbilisi

Interview with Partner CEO ILIA TSULAIA QUITE IMPRESSIVE SPACE ON THE CONSTRUCTION MARKET. ARCHI GROUP PLANS TO FURTHER STRENGTHEN IN THE CONSTRUCTION DIRECTION, PENETRATE MORE DISTRICTS IN TBILISI AND INTRODUCE EUROPEAN-STANDARD INNOVATIONS.

-Archi Group as a development company appeared on the Georgian market in 2008. How would you appraise your seven years operation? What changes have taken place in the company in this period? -In 2008 the world economic crisis broke out and all construction projects were suspended. The market needed a new and valuable company to appear. Therefore, we took a decision to launch new construction projects. We purchased a land plot in Vake District, built an office, where today Archi group head office is located. IN THE COURSE OF TIME, WE EXPANDED OUR ACTIVITIES AND TODAY ARCHI GROUP HAS GOT ONGOING AND FINISHED CONSTRUCTION PROJECTS NEARLY IN ALL DISTRICTS IN TBILISI. We are building in Vake, Bagebi, Plekhanovi, Didi Dighomi. We plan to launch a large-scale project in Saburtalo. Besides residential complexes, Archi Group also owns the network of hotels of Sunset: Sunset Kvariati – elite apartments of hotel category in Kvariati and Sunset Shovi – the first fourstar hotel in the resort of Shovi, the Racha Region. Boutique-style hotel of Silver 39 is being constructed in the Old Tbilisi District. We also plan to build residential houses in various districts of Tbilisi. -Archi Group is one of the leading development companies in Georgia. What is the secret for your success? -Archi Group makes focus on the quality and keeping schedules. One of our slogans

is: Archi Group in All Districts of Tbilisi. This signifies our company tries to develop products for all categories of customers. Consequently, any client is able to buy an apartment with desirable planning in a desirable district within the Archi Group network. WE HAVE SET UP A SPECIAL SERVICE THAT CONDUCTS MARKET RESEARCH TO DETERMINE PECULIARITIES OF THE MARKET DEMANDS DUE TO TBILISI DISTRICTS. This office processes the collected information to precisely adjust apartment planning to customer desires and preferences. The current situation on the apartments real estate market enables us to further enhance construction scales and reach all districts of Tbilisi to provide various options to our clients. -Archi Group plans to launch three projects. Construction works have started in Didi Dighomi. What are your conditions and innovations for your clients? -Dighomi Palace construction works started in 2011. This is a six-block residential complex with a recreation and ecologically clean zone. The construction of the first two zones has ended. In 2014 we started constructing two new blocks. The construction of the 5th and 6th buildings will start in 2015. IN WHOLE, ARCHI GROUP PLANS TO INAUGURATE 5-6 NEW PROJECTS IN 2015 ON 100 000 SQUARE METERS AND THIS IS

We will close all new projects with finished and fully equipped apartments. We will also offer more flexible payment systems to our clients. Our goal is to enable as many clients as possible to buy Archi Group apartments and to live in European environment and energy efficient buildings. Therefore, another slogan says: Archi Group –Your European House. -You actively follow a new trend for sales of finished and fully equipped apartments. What reaction and advantages were brought to your company by this strategy? -The housing market is recording a growth in sales of finished and fully equipped apartments. This trend is driven by aspiration for European standards and this is a positive tendency. Indeed, similar approaches considerably improve the construction works quality. Consequently, we will hand over finished and fully equipped apartments to our clients. - As to ecological issues, all leading developers, including your company, uses energy efficient materials to provide highquality construction works. What are other advantages of these materials? -We build our houses with high-quality and modern technology Ytong blocks. Ytong is a German brand and its construction materials are widely used in the world. Ytong blocks have got 7 times higher heat-resistance compared to ordinary concrete building blocks (heat insulation coefficient is 0012vt/sq.m). WALLS CONSTRUCTED BY THIS BLOCK MAINTAIN APARTMENT TEMPERATURE LONGER. CONSEQUENTLY, 40% LESS ENERGY IS SPENT ON HEATING AND COOLING THE BUILDING. Besides energy efficiency, Ytong block is ecologically clean material that provides healthy environment in an apartment. - How many residents are registered in Archi Group? How many square meters do your buildings cover and how much space will be added in the near future? -Today about 1000 residents are registered in Archi Group buildings. Our constructions cover 150 000 square meters and additional 100 000 square meters will be built this year. -Archi Group owns a network of hotels Sunset. Kvariati and Shovi assets have been already completed, while Tbilisi asset is being still constructed. What are your company plans in relation to the Sunset brand? -Currently two hotels operate under the brand of Sunset, in Shovi and Kvariati. Sunset Shovi is the first European level hotel in the Racha Region. The hotel launched valuable operation two years ago. We permanently develop infrastructure and provid maximum of comfort for our visitors. The

hotel contains a billiard room, children entertainment center, sports ground; we also organize horse-riding and footpath adventure-cognitive tours to the Upper Racha. AS TO SUNSET KVARIATI, THE ASSET REPRESENTS A HOTEL-STYLE RESIDENTIAL COMPLEX A 50 METER WAY FROM THE SEASIDE. THE FINISHED AND FULLY EQUIPPED APARTMENTS INCLUDE HIGH QUALITY FURNITURE AND APPLIANCES. THE COMPLEX OFFERS TOP CLASS SERVICES AND INTERESTING PROGRAMS TO PROVIDE MAXIMUM OF COMFORT AND BEST RELAXATION CONDITIONS TO VISITORS. Moreover, owners of the apartments are able to receive guaranteed incomes through the year. At this stage, we are constructing boutiquestyle hotel Silver 39. Investment value makes up 1.5million USD. The asset will be put into exploitation at the end of 2015. We also plan to construct a new 150-suite hotel. -What forecasts would you make for 2015. Which project will end in2015 and what are your plans for the coming years? -I believe the housing market will further grow in 2015 because of several factors: First of all, commercial banks have simplified mortgage loans issuance procedures. MOREOVER, CONSTRUCTION WORKS QUALITY WILL BE IMPROVED AND THIS FACTOR WILL INCREASE THE INTEREST OF CLIENTS FOR PURCHASING NEW APARTMENTS. AS TO FOREIGN CLIENTS, THE RUSSIAUKRAINE CONFLICT HAS SHRUNK THE INTEREST FROM THESE REGIONS. We expect this tendency to be maintained in 2015 too. Archi Group will complete projects in Bagebi, on Paliashvili and Tsinamzgvrishvili Streets, the C Block in Dighomi Palace. Besides development direction and hotels, our company takes active steps in other business sectors too. In 2015 we will launch construction of German energy efficient block Ytong plant. About 20 million EUR will be invested in the project implementation. -What is the main objective of your company and why do clients give preference to Archi Group? -Today Archi Group provides reliability, high-quality products and various options. WE DO OUR BEST TO COVER ALL SEGMENTS, OFFER VARIOUS VARIANTS OF DISTRICTS AND FLEXIBLE AND AFFORDABLE PAYMENT SCHEMES. In 2015 we plan to further strengthen the company status so as our clients associate our company with European standards and progress.

February 16, 2015 #87

REAL ESTATE caucasian business week

INTERVIEW caucasian business week

February 16, 2015 #87

LIVO - NATURAL JUICES OF FRUITS FROM GEORGIA Citrus juices are main products of LIVO company. The products are manufactured under the trademark of Choose Georgian. LIVO, a Georgian company of natural juices, has recently taken part in Green Week 2015, a Berlin Food, Agriculture and Horticulture International Exhibition. IRAKLI LEKVINADZE, a LIVO company director, talks about the products the company has introduced to the exhibition, as well as on other details of the company activities:

- When did your company launch operation on the market? How many varieties and what kind of products do you offer to the market? -LLC Livo was founded in January 2013. The first products under the brand of LIVO appeared on the market in April 2013. LIVO products are manufactured at Citro plant in Achara. The enterprise was organized as part of the Millennium Challenge Program to produce natural juices,

jams, tinned products of other fruits. Juices are produced by direct squeezing to maximally maintain especially useful and tasteful characteristics. We have introduced 8 varieties of juices to the market â&#x20AC;&#x201C; lemon, orange, peach, mixed citrus, peach citrus, cornel, plum, cherry and tomato. Citrus juices remain a visiting card of LIVO company. The products are manufactured under the trademark of Choose Georgian.

BUSINESS WEEK caucasian

The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Address: Shrosha Street 8/10 Director: Levan Beglarishvili Mobile phone: 591 013936; 577965577 Commercial Department: Irakli Lekvinadze Email: caucasianbusiness@gmail.com WWW.CBW.GE

-Your products are sold in the networks of Nikora and Goodwill. Do you plan to further expand the distribution chain? -The domestic market records sharp competition. Many varieties of juices are sold on the market, basically, imported nectars with low level of juice content, but their market ratio is impressive because of low prices. I would name Kula and Granini among high-quality juices in Georgia. At the same time, Kula has made huge contribution to popularizing Georgian juices. We make focus on exports sales, occupy only high segment on the domestic market and top class trade networks. Therefore, we have entered these two networks, because we are sure to reach our clients there. In late February we plan to add new trade networks. We have already launched negotiations. - As to the exports, how many and which countries do you export your products to? Do you plan to enter new markets in the near future? - In spring 2014 we exported our products to the Russian Federation. We had achieved agreement on concluding an exclusive contract for 2015, but because of the Russian crisis and Ruble devaluation the agreement has been suspended. At this stage, we are conducting negotiations with Estonian, Ukrainian, Swiss and Chinese companies. In 2015 our main strategy implies an introduction of our products to some exports markets. The Georgian Agriculture Ministry and the Entrepreneurship Development Agency provide essential assistance to us for taking part in international exhibitions and we bring our huge gratitude for these efforts. -Your enterprise operates in Achara. Do you import raw materials from abroad or use only domestic resources? - Our products are entirely made of only Georgian raw materials. We buy citrus from domestic farmers and other fruits in various regions of Georgia. -How many people do you employ at your enterprise? -At this stage we employ about 15 individuals

on permanent basis. The figure grows to 50 individuals on season, when the enterprise intensifies working regime. - You have taken part in international exhibitions, I mean Green Week 2015. What volume and what kind of products do you have introduced to the exhibition? -The Green Week is held in Berlin and after Tallinn this is our second involvement in the European exhibition space. We have introduced four positions in Berlin â&#x20AC;&#x201C; lemon, orange, mixed citrus and cornel. Our products have been introduced by Georgian-Swiss company GeoHouse. -You have won a golden medal at the World Food Ukraine 2014, a tasting competition in Ukraine. What assortments did you introduce there and do you plan to launch exports to Ukraine too? - We had introduced only lemon juices to the World Food Ukraine 2014 tasting competition. Domestic, German and Greek companies were our competitors. It was a very good surprise we were handed over a golden medal. In general, the World Food is a quite influential organizer of exhibitions that holds competitions in about 20 cities in the European and the Post-soviet countries (Kyiv, Istanbul, Warsaw, Astana, Riga, Hamburg, Moscow, Baku, London and so on). Our inclusion in their catalogue, especially, obtaining the golden medal is very important to find new partner. This year we suppose to introduce cornel juices to the World Food Ukraine tasting competition. In general, there is quite positive attitude and background in relation to Georgian products in Ukraine and the Post-soviet countries. The current hostilities and crisis, however, prolong the waiting regime, unfortunately. - Do you plan to enlarge the assortment in the near future or introduce some new products for the consumers? -We plan to increase our assortments. There is demand for juices of grapes, plural raspberries, and various berries. The line of stewed fruits is also very interesting. We will develop our activities in this direction in 2015.

The weekly is distributed to top companies, banks, embassies, state sector, Tbilisi and Batumi hotels, Tbilisi, Batumi and Kutaisi Airports, as well as in the town of Marneuli. The newspaper will also penetrate Azerbaijan in the near future

Editor-in-Chief: Nino Gojiashvili. Mobile phone: 595 050404 Reporters: Nutsa Galumashvili; Tamar Kakabadze, Lazare Gvimradze

Source: www.commersant.ge, www.bpi.ge, www.gbc.ge, www.agenda.ge, www.civil.ge

February 16, 2015 #87

ater resource is one of Georgia’s main natural resources with a total annual potential capacity equivalent to 15000 megawatt. Hydro power potential of the river Enguri makes up 3500 megawatt, while the electricity generation potential is 10.3 billion kilowatt-hours. Georgia has three major rivers namely Enguri, Rioni and Mtkvari fit for constructing mediumsized and major hydropower plants (HPPs). Khudoni HPP is part of the Enguri Cascade System which was envisaged in 1978. Only two HPPs – Enguri HPP (1320 megawatts) and Vardnili HPP (220 megawatts) are presently operational as part of this cascade. Both HPPs combined generate 5.5 billion kilowatt-hour of electricity whereas hydro power resources of river Enguri are estimated at around 10.3 billion kilowatt-hour and to fully utilize this power three more HPPs should be constructed, besides Khudoni HPP. Khudoni HPP construction works were initially started in 1982. Major Underground works have already been completed including Underground Powerhouse cavern that has been mostly excavated and crown concreted, Intake and tailrace tunnels are also excavated and partially lined. The dam concreting works were underway in 1989 when the project was suspended because of several reasons. According to various calculations, Georgia used to generate 13.6 billion kilowatt-hour of power and import 4.5 billion kilowatt-hours to meet its demand of 18.5 billion kilowatt-hours. In 199094 power generation fell to 6.9 billion kilowatthours and the energy crisis in Georgia was highlighted which led to revival of Khudoni HPP.

As per the World Bank (WB) ratings, Khudoni HPP project is considered as one amongst the world’s top 100 infrastructural mega projects.

New Life of Khudoni HPP Georgia’s growing demand for electricity, business-oriented legislation and the deregulated generation policy make investments in the hydro power generation very attractive. Also everybody realizes the vital importance of Khudoni HPP for the Georgian power system and authorities have always voiced their support for Khudoni HPP. “Hydro power generation is the fundamental requirement for development of our country. We must construct as many HPPs as possible so that Georgia generates abundant electricity and prepare a basement for developing various enterprises. Growing economy and new factories need power and we should realize this factor”, Ex. Prime Minister Bizdina Ivanishvili said. PM Irakli Gharibashvili: “We should implement Khudoni Hydro project for sake of our children and future generations, because this project is of crucial importance for energy independence and energy security of Georgia”. The Georgian Energy Minister Kakha Kaladze says: “Khudoni HPP is a strategic asset of state importance. The project implementation will play a huge role for enhancing Georgia’s energy independence. I would say the project implementation is one of the main preconditions to save the Svaneti Region”.

Why Khudoni HPP? Trans Electrica, the Khudoni HPP project construction company, explains: Georgia’s huge hydro power resources remain untapped as only 18% of this potential is harnessed. At the same time statistics confirm the domestic market’s growing electricity demand and also export potential to the neighboring countries. Khudoni HPP will be able to partially bridge this requirement and our experience and

HPP

caucasian business week

KHUDONI HPP – PROJECT OF THE CENTURY FOR GEORGIA technical expertise in planning and constructing HPPs will definitely help in realizing this infrastructure marvel for the development of Georgia. Making one of the major investments in Georgia’s renewable energy sector and the Caucasus Region will exhibit Georgia as a risk-free investment destination across the world. Successful implementation of Khudoni HPP project will further enhance Georgia’s profile as a pro-clean energy country and augment new investments into the power sector. Researches in Georgia’s power sector have prov-

en that today’s total generation will not suffice the future needs in electricity. Developing HPP’s is paramount to maintain the electricity balance of Georgia and Khudoni HPP is very important strategically for energy security. Further Khudoni HPP working in tandem with Enguri HPP will enable to maximally control & utilize the energy potential of the Enguri.

on Environment Protection and Rehabilitation. Many internationally renowned organizations have been part of research for Khudoni till date and during implementation also expertise from across the world will be involved”. Mr. Bhupendra Kansagra, Kansagra Group of Companies “We own enough financial and technical resources. Moreover, we have implemented larger-scale projects than Khudoni HPP very successfully”.

Brief Technical Information on the Project: Khudoni HPP will be constructed in the vicinity of Khaishi settlement in Mestia District, the upper part of the Svaneti Region around 400 kilometers from Tbilisi. A 200 meter high double curvature concrete arch dam generating 702 megawatt of electricity makes it the second largest HPP in Georgia (After Enguri HPP). Once completed with an investment of 1.2 billion USD, Khudoni will annually generate 1.5 billion kilowatt-hours of electricity for people of Georgia; The initial studies on Khudoni were carried out by the 3 specialist agencies namely: BRL-ARS, Stucky-Colenco JV, SEEC which were further reviewed and certified by Panel of Experts of five members designated by the World Bank. To further reconfirm Geology of the area and finalize the Dam Parameters, Trans Electrica conducted further Geological, geophysical, seismic and other technical research works of the Dam Area which were performed by Stuky in line with technical regulations, guidelines and requirements of ICOLD (International Commission of Large Dams) and the

of the Enguri River and its environs as an invaluable natural resource. That’s why we’re committed to preserving and enhancing the area near the hydropower project for current and future generations. The company will put in all efforts to protect the Svaneti Region environment and cultural heritage thanks to international experience and innovative technologies. We assure that Khudoni project would advance this Complimentary Agenda and once completed this would be our small contribution to the world where governments are seeking ways to reduce the threat of global warming by limiting greenhouse gas emissions.”

Khudoni Benefits Georgia as a country will surely benefit by Khudoni but the major benefit will be to the entire Samegrelo - Upper Svaneti region where the socio economic condition will get very improved with the implementation of the project. The benefits associated with the project are many which can broadly be classified into three categories: • Social: - Employment for 4000 people during Construction; 250 persons during operation. - Availability of trained manpower for future infrastructure projects. - Infrastructure Development - Healthcare, Communication, Better Roads etc. - Economic: - Economic Development of Local Population. - Taxes paid to the state. - Local Land & Property Tax will benefit the development of Svaneti region.

Who is implementing the project? As per agreement signed with Government of Georgia, Trans Electrica Georgia (A company incorporated in accordance with Georgian Laws) is implementing Khudoni Hydro Power Project. Trans Electrica provides a blend of global reach, local knowledge, innovation, and technical excellence in delivering solutions that would help in enhancing and sustaining the natural and social environments. Continental Construction with over 60 years’ experience in specialized construction activities is an associate company of Trans Electrica and will be bringing in the much needed technical expertise for implementation of such mega HPP. Continental’s major areas of the activities are hydropower engineering, public health engineering, irrigation and marine construction. Continental Construction has been involved in the construction of about 30 hydro assets across the globe including Wadi Ghan Dam in Libya and the currently ongoing Al Karak Dam in Jordan. Major civil works of 1500 MW Nathpa Jhakri Power Project (Biggest commissioned HPP in India as on date) was also executed by Continental. What Founders of Trans Electrica have said: Mr. Mohinder Verma, also one of the founders of Continental Construction: “We have constructed over 27 dams and water associated assets across the globe. In line with our company values, we will implement Khudoni HPP project to the highest international standards in the shortest possible time. Besides our financial resources, we will involve our huge technical expertise in the project and Khudoni HPP project will be implemented adhering to IFI guidelines

United States Army Corps of Engineers. David Mirtskhulava, a Technical Director for “Trans Electrica Georgia” underlined that “-Khudoni HPP is the most prestigious project in the Caucasus Region and with investment of 1.2 Billion USD it is the biggest planned investment in Georgia’s energy sector ever. On completion Khudoni HPP will generate 1.5 billion units of electricity which will provide the much needed energy security for the people of Georgia. Further on the basis of the latest agreement, total energy generation will remain in Georgia for the first 15 years. Additionally, Khudoni HPP construction will also help in regulating river Enguri which will lead to additional 470 million kilowatt-hours generation for Enguri HPP.”

Environment & Rehabilitation Impact Paata Tsereteli, General Director of “Trans Electrica Georgia” – “We take environmental stewardship very seriously. We fully appreciate the importance

- Enguri HPP - additional generation of 470 million units. - Silt regulation will increase life of Enguri Reservoir by 20 years. • Strategic: - Project Georgia as a risk free investment destination. - Meet future energy requirement and maintain the balance. - Energy Stability in case of non-generation by Enguri HPP.

Conclusion Considering the growing energy requirement of Georgia and also the global shift from dependency on Fossil Fuels to Clean and Green power, we should all work together hand in hand towards realising the dream of Project Khudoni as speedy completion of this project would certainly open up an exciting new world of opportunity – for the people of Svaneti, for the people of Georgia, and indeed for the whole world moving towards Clean and Green Power.

PETROCAS ENERGY GROUP caucasian business week

February 16, 2015 #87

WHAT WE DO We are region’s key oil product transit expert. We are operating in the sphere of oil & petrochemicals transportation in the Caspian Region, Middle Asia and South Caucasus on the rout that’s known as

the Silk Road. We are experienced, responsible, dynamic, and growing diversified investment group to provide a full set of integrated services in trading, forwarding, logistics, storage and retail.

TRADING HISTORY In a short time since its establishment in 2009, Petrocas Energy Group has managed to grow into the most important oil transportation company in Georgia and an important link in the Caspian energy transit corridor. The idea to create an energy transportation company emerged when professionals in energy trade, logistics, and storage with strong background in business management and public administration had a vision of a completely new kind of energy transportation company in Georgia. Their philosophy was based on the good knowledge of the Region in which they were going to start operation. Georgia has always served as an entry gate to the Caucasus and Central Asia as well as a stepping stone to the region. Leveraging its location, transport economy of Georgia could benefit from large addressable transit flows, growing economies and landlocked resources. Geographically well situated in the Southern Caucasus, Georgia can be reached easily from most major European, Central Asian and Middle Eastern locations. And besides, there was not a single company in the Region who could provide a full set of energy transit services in the Region. That vision of a diversified transit company with an all-inclusive value chain of high quality transit services operating on a regional level with potential of further growth and geographic expansion

led to the creation of Petrocas Energy Group. With the strategy of growth and business diversification in mind, the Group soon established partnerships with the regional petroleum producers supplying some of the petroleum and petrochemical products. The subsidiaries of the Group were formed – Tepco Ltd, logistical operator; Channel Energy, the most modern oil terminal on the Black Sea coast fully complying with the international quality standards. As a logical extension to the existing business lines, the retail sales business was launched in November 2010, acquiring a full operating license from GULF Oil International allowing the Group to develop its own activity as a retail chain operator of petrol stations under the new brand name – GULF Georgia. Today, Petrocas Energy Group is an ever growing holding with the network of oil suppliers, now including Russia, and still growing, having offices in four countries, with the largest retail chain of petroleum stations in the area and expanding the chain to the countries of the Eastern Europe, reinforced by owning the most modern oil terminal on the Black Sea. We are a young but innovative company with a strategy for growth, further geographic expansion and diversification of our value chain. And we are committed to be your reliable business partner.

Trading is the engine of our business, and energy is the resource we trade. Petrocas Energy Group’s activities are driven by the focus on ensuring reliable sources of energy resources. More than simply a thread linking every aspect of what we do, trading is the channel through which we receive and share vital market information, maintain the flow of our liquidity, and forge lasting, rewarding relationships with customers and partners all over the Eurasian Region where we constantly increase our presence across the countries of the Region. We conduct our trading and logistical activities in countries of Eastern Europe, Caucasus, Central Asia and Russia through our offices in Tbilisi, Moscow and Almati. We use local knowledge and insights to anticipate demand and react swiftly and efficiently. Our customer network, however, crosses the borders of the Region where we operate and reaches out to the energy players across the ocean that

seek entrance to the markets in Eurasia, the home of our operation. The breadth and reach of our regional network gives us a profound understanding of the intricate interdependencies of the world’s energy markets. Empowered by the vertically integrated subsidiaries of our Holding, our trading is able to provide services that comprise transportation and storage, logistics and retail sales, which makes Petrocas Energy a unique player and an important partner in the entire Region able to meet the multifold demands of our customers. Founded in 2009 with the focused aim of trading and transporting oil products and petrochemicals from the Caspian Region to the Black Sea ports, Petrocas Energy is an independent group staffed by energy professionals with a true depth of experience and knowledge in the business of energy market intelligence, transportation, storage, logistics, trading and finance.

ABOUT US Petrocas Energy Group is a multifunctional holding operating in the sphere of oil & petrochemicals transportation in the Caspian Region, Middle Asia and South Caucasus on the rout that’s known as the Silk Road.Our activity ranges from trading, forwarding and supply to handling and storage of oil and chemical products transported from East to West and West to East through the Poti oil terminal. The Group also owns one of the largest retail petrol stations in Georgia operating under the world-renowned brand – GULF Oil International. The work of the group’s subsidiar-

ies is brought in compliance with the ISO certified management systems.The Group is run by a highly professional and experienced Western-education management team with multiple years of experience in the energy sector, as well as multimillion projects management and extensive international experience. We enjoy broad political and business network of regional and international connections with high level sector players. The company was established in 2009 and has representative offices in Georgia, Cyprus, Russia and Kazakhstan.

STRATEGY Our overall Group strategy is to continue organic growth of the company through increased efficiency, geographic expansion and capture of additional value through the advantage of Petrocas Energy Group business model derived from vertical integration of assets and services.

WORLDWIDE OPERATION We have representative offices in Eastern Europe and Central Asia. Each office has access to the expertise, resources and provision of regional operation and activities which are managed locally in Georgia, Cyprus, Russia and Kazakhstan. With our strategic intention in mind of expanding our geographic presence, we constantly search

for new frontiers in all of Eurasian Region and beyond. We therefore have a very optimistic outlook for our future network of operational presence worldwide. Below is the map of Petrocas Energy Group’s current network of representative offices that cover four regions of Eurasia: Central Europe, Caucasus, Central Asia and Russia.

STORAGE One of the newest oil terminals on the the Black Sea coast having the most modern storage, throughput and logistical facilities fully complying with the international quality and safety requirements. POTI OIL STORAGE TERMINAL Channel Energy was set up in 1999 to offer a fresh approach to the business of energy storage in the Caucasus that had been part of the region’s history since the mid 1870’s. Just over a decade ago, the industry and its facilities had become severely rundown, bereft of investment or imagination and wallowing in its 19th Century beginnings. In conjunction with the international funding organization, EBRD (European Bank of Reconstruction and Development) and other partners, we have created and continue to deliver new international standard facilities and services in the part-derelict Georgian ports of Poti and Batumi and have in the process breathed new life into both the industry and region.

With invaluable expertise from EBRD, Channel Energy’s developments have been planned and delivered with the environment at the forefront. The company has been granted all required sector-specific ISO quality certification. The Terminal was part of the enlargement project of the Poti Sea Port and provides an important service to importers and exporters and an alternative to the other Georgian Terminals located at Batumi and Kulevi. The Terminal historically has been fully supported by offtake agreements with major oil and trading companies active in the region. Channel Energy continues to work with energy trading companies and energy majors who conform to our exacting business standards. We see our mission in rebuilding and reinvigorating the energy storage industry in the Georgian port, and in facilitating the energy transfer industry from the Caspian Basin to the global markets via our terminals on the Black Sea.

OUR SERVICES Channel Energy provides storage, throughput and logistical facilities for a comprehensive range of cargoes and provides terminals equipped with rail (RTC) receiving platforms and ship transfer services for oil, light fuels and petrochemicals.

LOGISTICS TEPCO LTD Tepco was established within the Group to provide energy transit solutions to complement a sister storage company and enable the Group to deliver a turnkey service throughout the Caspian, Caucasus, and Black Sea regions.

RETAIL Gulf Georgia is one of the leading oil companies on the Georgian market. Its success is driven by high quality fuel and customer service. This international brand has been represented officially in Georgia by “Sun Petroleum Georgia” LLC, since November 2010.We trace the establishment of our world brand to 1901 in the USA. Nowadays Gulf Oil International distributes high quality oil products to more than 100 countries and is one of the major players in the world market. Gulf Georgia currently successfully operates 140

refuelling stations nation-wide. Since 2012 we introduced the branded convenience stores and several CNG stations. In 2013 we introduced the first in Georgia self-service fuel station. Gulf is one of the major employers in Georgia – we currently have more than 1300 employees and their number is growing. We import fuel from the best oil refineries in Europe whose quality control complies with world class standards. Gulf refuelling stations are distinguished with modern equipment and western state-of-the-art innovative technologies.

February 16, 2015 #87

INTERVIEW caucasian business week

BEELINE – ENGINE FOR MARKET COMPETITION

4G Internet is Our Major and Population-oriented Social Investment After continuous efforts of cell operators, especially, Beeline and after subscribers’ long waiting, the Georgian National Communications Commission (GNCC) has taken a decision on introduction of the 4G internet technology in Georgia. Starting February 1, 2015 all three cell operators are able to provide the 4G internet connection. This signifies the 4G internet will be accessible in Georgia too. This decision will satisfy the subscribers’ interest and bring very important secondary affect in terms of business environment improvement. Moreover, technological innovations and development imply multimillion investments. 4G product is the 4th stage of technological development of cell communications with faster and higher-quality internet connection. This signifies tenfold faster internet connection compared to the 3G technology. Theoretical speed for data transfer hits about 300 megabytes a second and this is the fastest internet today. Cell operators will spend 288 244 086 GEL for two years. Besides the mentioned benefits, the 4G internet introduction will also intensify competition on the Georgian market. One of the market players was not entitled so far to provide the internet of the same quality as other providers do. Therefore, Beeline has to provide 2G internet connection, while Magti and Geocell provide 3G internet services. As to the 4G fast internet, all three companies will now offer this technology to subscribers. As a result, market ratios will change. Beeline director general GIORGI TKESHELASHVILI talks about the potential of LTE technology and a new stage in the Georgian communications market.

- Mr. Giorgi, on February 1, 2015 after the 4G internet inauguration, you noted at one of the public speeches “the era of new technologies has started in Georgia”. It is interesting what changes will Georgian citizens see after this event and what are the advantages of your company at this stage? - I am grateful for your interest in this issue. Beeline subscribers will simultaneously receive 4G internet (LTE) in 30 cities of Georgia. Beeline subscribers are able to enjoy 4G internet connection by cell phones, modem and routers. Sure, the introduction of LTE technologies has moved Georgia to a new level of technological development. We have waited for this moment for several years jointly with our subscribers. We bring special gratitude to our loyal subscribers, who have maintained confidence and positive attitude to our brand for many years. I WOULD LIKE TO DESCRIBE THE ADVANTAGES OF 4G INTERNET TECHNOLOGY COMPARED TO THE PREVIOUS GENERATIONS. FIRST OF ALL, THIS TECHNOLOGY PROVIDES VERY FAST INTERNET CONNECTION. IT IS DIFFICULT TO MAKE COMPARISON, BUT THOSE HAVING OPTICAL-FIBER INTERNET ACCESS CAN IMAGINE HOW FAST INTERNET I MEAN. 4G INTERNET TAKES SEVERAL SECONDS TO DOWNLOAD MOVIES OF SEVERAL GIGABYTES, STREAMING OF ONLINE MOVIES CONTINUES WITHOUT DISRUPTION. THIS IS THE TECHNOLOGY OF THE FUTURE. Developed countries have already established this technology. Almost all European countries have already established this standard. Moreover, Georgia’s neighboring countries have also organized access to LTE technologies. Today, Georgia has also joined the list of these countries that make a core of progressive technologies. This is very important innovation for Georgia in terms of intensification of business activities and faster data transfer, educational progress. Students and pupils will be able to have faster access to the internet all over Georgia. 4G technology will provide new opportunities to the Healthcare sector in terms of easier transfer of large-volume files, easier communication between clinics for diagnostics in live regime and so on. THIS TECHNOLOGY WILL BE USED IN VARIOUS FIELDS, FOR EXAMPLE, IN RADIO BROADCASTING ON THE TERRITORIES WHERE RADIO TRANSMISSION EQUIPMENT DOES NOT EXIST. IN THIS CASE LTE TECHNOLOGIES WILL SPREAD RADIO FREQUENCIES.

IN GENERAL, THIS IS A VERY IMPORTANT PROGRESSIVE STEP AND I AM GLAD OUR COUNTRY HAS JOINED THE GROUP OF DEVELOPED COUNTIES IN THIS RESPECT. By the way, various international organizations, including the World Bank (WB) have conducted research and concluded an access to the fast internet has got directly proportional relation to the economic growth, about 1% growth, and I believe this is a quite good indicator. I am personally very pleased Beeline’ staff represents a consolidated team that established innovations and these innovations will assist each of us to become more modern and progressive. - You have mentioned the issue of regions development. Beeline has assumed certain obligations in this respect. Namely, the company has taken obligation to develop this technology in the regions that are less profitable in terms of commerce. Do you think such an obligation is a social responsibility? - Thank you for this question. I do not like the word of Obligation. THIS IS OUR PRIDE TO BE THE COMPANY THAT WILL PROVIDE MODERN TECHNOLOGIES TO THE LEAST ATTAINABLE SETTLEMENTS IN GEORGIA. Under our agreement with the government, besides densely populated cities and territorial unites within the interest in Beeline, the company will also establish 4G internet service in the settlements, where, according to the recent census, about 5000 persons live only. Our company has also taken obligations in terms of schedules. Namely, we must cover 30% of the Georgian territory with 4G internet signal until February 1, 2016, 50% until February 1, 2017, 70% until February 2018 and 90% until February 1, 2020. Today, young people in small and densely populated settlements stay on different level in terms of internet access. For example, Gori, Telavi, Batumi or Tbilisi cities provide highquality internet connection and residents there are able to have an access to information, while population in small settlements lacks for this opportunity. On the one hand, this factor makes negative affect on the development of youth. They come back of their fellows in terms of access to information. On the other hand, informational vacuum will be removed in the settlements, where we will provide high-quality internet and this is one of the most important challenges to the contemporary world. The 21st century represents an age of exchange of information streams and joint information space. INTERNET ACCESSIBILITY – THIS IS THE MAJOR AND CITIZENSORIENTED SOCIAL INVESTMENT MADE IN GEORGIA EVER. WE

ARE GLAD VERY BEELINE WILL ENSURE INTERNET ATTAINABILITY ALL OVER GEORGIA. For a year the population of Georgia will receive modern standard internet. Several tens of millions of GEL will be spent on infrastructure construction till 2020. I would openly say this is one of the important private infrastructural projects in the history of Georgia. - Earlier Beeline was reported to be providing low-quality internet. What has changed after 4G internet activation? Does your company provide as high-quality internet now like your competitors? - As to the internet speed, 4G technology is a new standard that determines minimum and maximum speeds of the internet. Therefore, Beeline subscribers will receive world standard internet. Consequently, our subscribers will have no questions about the internet speed. We provide one of the best speeds, qualities and coverages. - I would like to ask you about the competition issues that imply many difficulties in the Georgian reality, including monopolies, oligopolies and so on. As to the cell operators’ market, everybody recognizes unanimously that appearance of Beeline on the market is a classic sample of competition that clearly outlines valuable competition affects, including the ways for maximally lowering tariffs. What will be your strategy after LTE has become attainable and do you expect certain changes on the market? - Indeed, the market competition is important, especially on the communications market. When all three operators provide the same speed internet, indeed, the market ratios will change. We expect our ratio to increase and consequently, others’ will shrink. This will be new reality. WE ARE PROUD BECAUSE BEELINE HAS BROUGHT THIS COMPETITION. FOR MANY YEARS WE HAVE OFFERED THE MOST AFFORDABLE TARIFFS TO THE SUBSCRIBERS AND WE PLAN TO CONTINUE THIS POLICY. BEELINE’S SLOGAN IS – ALWAYS LOWEST PRICE AND YOU CAN MAKE SURE WE JUSTIFY THIS SLOGAN AND THIS TREND WILL BE MAINTAINED. THIS IS OUR MESSAGE TO OUR SUBSCRIBERS. We always back the competitive environment. We do not afraid of competition. On the contrary, I believe very Beeline is an engine for the market competition. Our goal is to offer innovations to our subscribers, interesting products. The company staff always follows this objective and, indeed, we will not stop. AT THE SAME TIME, I WOULD LIKE TO EXPRESS MY GRATITUDE TO THE GOVERNMENT FOR THE

PRINCIPLE OF MAKING ALL THIS OPEN AND TRANSPARENT, WITHOUT BARRIERS SO AS EVERYBODY ENJOY EQUAL RIGHTS. - Technological development boosts economy, but what kind of investments should be made in this sector for the market players for introducing certain innovations? - As to the investments, the communications market, in general, is expected to invest several millions of GEL in the coming years. I cannot name an exact amount, but, I believe about 0.5 billion GEL will be invested in the sector. This is very huge investment for a country like Georgia and our economy. I expect this investment to bring quite good results. This is an open investment without barriers. We should understand this amount of investments will be made for about 5 to 7 years, not in a day. - In the end I would like to ask you about Beeline’s very interesting initiative. Several days ago jointly with the Association of Young Financiers and Businessmen (AYFB) you have launched a new project – Develop Business. What is the goal of this project? - First of all, I would like to note the 4G internet introduction will provide equal opportunity to every resident in our country, including for business bodies. Today the business sector lives by information and we have made this information accessible. AS TO THE NEW PROJECT, IT IS IMPLEMENTED UNDER THE BEELINE’S NEW SOCIAL RESPONSIBILITY CAMPAIGN OF MAKE YOUR MARK. THIS IS OUR NEW EFFORT TO ASSIST SMALL AND MICRO BUSINESSES AND PROMOTE SOCIAL AND ECONOMIC RECOVERY IN GEORGIA. THIS IS THE FIRST PRECEDENT IN GEORGIA, IN PRACTICE, WHEN THE MAJOR BUSINESS ASSISTS SMALL AND MICRO BUSINESSES AS PART OF THE SOCIAL RESPONSIBILITY POLICY. I would like to express my gratitude to AYFB that has backed our initiative and joined the project implementation. AYFB is a group of professional economists and financiers able to successfully bring project-implied results and goals to beneficiaries. The project calls for boosting the very significant segment of the Georgian economy. The target group includes the self-employed that make up over 60% of the employed in Georgia. Consequently, exploration of the problems before the self-employed, efforts for their resolution and popularization of business activities of the self-employed will be additional step forward for the social and economic recovery in Georgia.

GEORGIA

caucasian business week

February 16, 2015 #87

GET TO KNOW GEORGIA, THE COUNTRY

Located between Asia and Europe, a South Caucasian country of Georgia was historically part of the Silk Road. After a 70-year long Soviet rule, the country has been restoring its economic and cultural independence for the past two decades. After the Rose Revolution of 2003 and the subsequent change of the ruling National Movement party by the Georgian Dream Coalition in 2012, Georgia is building its aspirations as an emerging economy. Get to know what World Bank, Forbes, Heritage Foundation and UNESCO are saying about the country in our news highlights.

UAE LEGATUM PROSPERITY INDEX: A LOOK AT GEORGIA’S ECONOMIC PROFILE

GEORGIA, REGIONAL LEADER IN BUSINESS REPORT BY WORLD BANK 2005 Georgia had carried out the highest number of reforms in the region after Rwanda. The Study said that since 2005 Georgia had carried out the highest number of reforms after Rwanda region after Rwanda Georgia holds first place for ease of doing business among countries in the Eastern Europe and Central Asian region according to a new study by World Bank. The ‘Doing Business 2015: Going Beyond Efficiency’ report saw Georgia rank first in the region and take 15th place out of 189 countries. The research said Georgia had carried out 36 reforms in this field since 2005 – the highest number in the region after Rwanda. Georgia was followed by the Republic of Macedonia with 34 reforms. “Economies in Europe and Central Asia have consistently led the world in the pace of regulatory reform,” said Rita Ramalho, Doing Business report lead author “Governments’ commitment to improving the regulatory environment for entrepreneurs has allowed them to close the gap with the top performers in some areas. For example, the average time to register property in the region has fallen by 14 days since 2010, making the process faster than in OECD high-income economies,” she noted. Globally, Singapore took the top spot in terms of

ease of doing business, followed by New Zealand, Hong Kong, Denmark, Korea, Norway, United States of America, United Kingdom, Finland and Australia. Georgia’s 15th global position was one spot lower than the ranking it was offered in 2014. The Doing Business Report is a study annually elaborated by the World Bank Group since 2003, which presented a detailed analysis of costs, requirements and procedures a specific type of private firm was subject to in all countries, and then, created rankings for every country. The study has become one of the flagship knowledge products of the World Bank Group in the field of private sector development, and is claimed to have motivated the design of several regulatory reforms in developing countries. The ‘Doing Business 2015: Going Beyond Efficiency’ report measured regulations that affected 10 areas of the life of a business. These were: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. The report also measured labour market regulation however this was not included in this year’s ranking.

GEORGIA RANKED 22ND ON INDEX OF ECONOMIC FREEDOM – HERITAGE FOUNDATION

eorgia’s economic freedom score is 73.0, making its economy the 22nd freest in the 2015 Index. Its overall score has increased by 0.4 point since last year, primarily reflecting improvements in freedom from corruption, monetary freedom, and the management of government spending that outweigh a notable decline in labor freedom. Georgia is ranked 11th out of 43 countries in the Europe region, and its score is well above the regional average. With a 2.6-point score increase over the past five years, Georgia has registered improvements in five of the economic freedoms, including freedom from corruption, the control of government spending, business freedom, monetary freedom, and investment freedom. Achieving its highest score ever in the 2015 In-

dex, Georgia has advanced further into the category of “mostly free.” A decade of solid increases in economic freedom has contributed to the dynamic expansion of Georgia’s economy. Sound public finances and policies that support open markets have boosted prosperity and reinforced Georgia’s commitment to economic freedom. However, not all of the pillars of economic freedom are fully entrenched. Rule of law remains weak, and the perceived level of corruption, though improving, is higher than average for a European country. Quick Facts: Population: 4.5 million GDP (PPP): $27.6 billion 3.2% growth in 2013 5-year compound annual growth 3.7% $6,145 per capita Unemployment: 14.3% Inflation (CPI): –0.5% FDI Inflow: $1.0 billion Public Debt: 31.8% of GDP.

eorgia ranked 80th among 142 countries on a UAE-based thinktank Legatum Institute’s Prosperity Index. The country moved up four points compared to the last year’s ranking. Georgia is preceded by Azerbaijan occupying 79th place, and followed by South Africa, ranking 81st. Legatum’s Prosperity Index is an annual ranking of 142 countries assessing prosperity beyond the dry macro-economic indicators. The organization suggests a more subjective look to an economic analysis of a country – they approach economics from an individual’s point of view. How much does one trust the government elections in the country? How comfortable/uncomfortable does an individual feel searching for a job at the moment? How much of a social support network does one in the selected country have? The institute’s outlook is the following: “Most people would agree that prosperity is more than just the accumulation of material wealth, it is also the joy of everyday life and the prospect of being able to build an even better life in the future.” To asses these quite subjective social matters the Legatum Institute introduces such “Prosperity Principles” into their equation as: Personal Freedom, Entrepreneurship and Opportunity, Safety and Security, etc. So how does Georgia rank compared to other countries? What are our country’s strong social points? Turns out, we are in the middle to high range on the spectrum of the selected 142 countries. Occupying the 80th place, Georgian population demonstrates strong trust in the government sector – 69,9% — when the global average percentage stands at 49.9%. Presented is the data analyzing the people’s attitude in the year 2013. Georgia has moved up 11 points in this category since the year 2012. Considering the country’s political transition in this period – the change from the United National Movement to the Georgian Dream Coaliton – it seems the people of the South Caucasian country were significantly confident in the political shift taking place on the political arena. This trend, perhaps, can also be observed in the move by 23 points in the ‘Personal Freedom’ category, from 79th in 2012 to 56th today. Surprisingly for such a collective society that Georgia is, where individuals have very close ties with their relatives and rely on nepotism as a driving force of the labor market, the country scored

lowest on its “Social Capital” index: 132nd. This category of the Legatum Institute’s survey is determined by such questions as: “Can you rely on a friend and family for help? Are you married? Do you think that most people can be trusted?” More importantly: “Have you volunteered your time in past month? Donated money to charity in past month?” Georgia scored the lowest in the latter: 4% compared to the global average of 28.9%. Turns out, that the social atmosphere of the country is not just determined by how many friends or relatives one has, but also by how generous the population of a country is toward the less well-off individuals of the society. ‘Economy’ ranking 91, and ‘Health’ at 92 follow right after ‘Social Capital ’ in terms of the scores. It is no surprise that a developing country should score low on these categories. However, a considerable increase, up by 41 points, in ‘Economy’ from 132nd place in 2012 to 91st in 2013 should be noted. The 5-year GDP per capita growth rate of Georgia is 3.1% as opposed to the global 1.8%. Perhaps, Georgia owes its drastic improvement this year in the ‘Economy’ category to this figure.

February 16, 2015 #87

GEORGIA

caucasian business week

GET TO KNOW GEORGIA, THE COUNTRY

FORBES NAMES GEORGIAN WINES IN ‘9 BEST WINES AND SPIRITS TO START DRINKING IN 2015’

merican ForbesLife magazine named Georgian wine in its ‘New Year’s resolution that you might actually keep’ or ‘9 best wines and spirits to try out in 2015.’ The publication asked a group of sommeliers, mixologists and writers what they wanted to imbibe more of in 2015, and what they would like to see more consumers try as well. Georgian wines were one of their top recommendations: “The country of Georgia may not be familiar to the average wine drinker, but evidence suggests

they’ve been making wine there longer than anywhere else (about 8,000 years). They’re an exploration, a great way to open your mind to different worlds,” says wine writer Alice Feiring. “The 2012 and 2013 vintages are better than ever.” Forbes Life reported orange wine (made when white grapes are allowed more skin contact time after crushing) was a popular method here and “if you’ve never tried these wines,” Feiring believed “Georgia was the place to start.” “Orange wines can sometimes be harsh with tannins and dried out,” she says. “But these wines have juiciness and a great balance of fruit and structure. Close your eyes, pretend you’re drinking a red and you’ll love it.” Feiring highly recommends wines from Alaverdi Monastery, Pheasant’s Tears and Iago’s Wine. UNESCO established recently that Georgia is probably the oldest wine region in the world. The fertile valleys of the South Caucasus, which Georgia straddles, are believed by many archaeologists to be the source of the world’s first cultivated grapevines and Neolithic wine production, over 8,000 years ago. UNESCO added the ancient traditional Georgian winemaking method using the Kvevri clay jars to the UNESCO Intangible Cultural Heritage Lists. Along with the Georgian wines, the Forbes list also included Amaro, Nocino, Sherry, Washington Wines, Gin, Zinfandel, Rum, etc.

GEORGIAN SCRIPT AMONG WORLD’S FIVE MOST BEAUTIFUL ALPHABETS

Brazilian journalist Felipe Sant’Ana Pereira placed Georgian on the third place, after Burmese (Myanmar), Sinhalese (Sri Lanka) in his list of “World’s most beautiful alphabets…and why you’ll never learn to read them.” Georgian was followed by Tagalog (Philippines), Hanacaraka (Indonesia) in the top five. Here’s what the Brazilian journalist had to say about Georgian script: “Squeezed between Turkey and Russia, Georgia has its own language and alphabet, both of which are threatened by Russian domination. In the last century, Russian imperialist policy resulted in the

annexation of more than half of Georgia’s original area. Furthermore, continuing pressure for the small country to cede additional portions of its territory suggests that fewer and fewer Caucasians will be speaking and writing Georgian as time goes on, as Russian and the Cyrillic alphabet supplant the native systems. The Russian desire to control oil pipelines that run under Georgia also represents a menace to the sovereignty of the local culture. It’s a pity: The Georgian alphabet shows an elegance that brings to mind Arabic, combined with a child-like simplicity expressed in rounded curves.”

GEORGIA AMONG TOP FIVE COUNTRIES IN TERMS OF PUBLISHED BOOKS PER CAPITA IN 2014

eorgia among 5 countries by published books in 2014. According to the data, 1547 books were published in the country last year. Last year 184,000 titles were produced – the equivalent of 2,870 titles per million inhabitants when population is taken into account. Britain produces more books per capita than any

other country, according to the International Publishers Association. China and the US produced more overall titles – 444,000 and 304,912 titles respectively. However per capita, the US ranked 12th and China 25th. Taiwan and Slovenia (both producing 1,831 titles per million people) are closest to Britain’s figure, followed by Spain (1,626), Georgia (1,547) and the Czech Republic (1,509).

GEORGIA’S CUISINE RANKED 4TH IN EUROPE BY THRILLIST

eorgia’s unique food and drink is becoming more known to the Western world after a United States-based online lifestyle magazine placed Georgia high on a list ranking European countries by their indigenous cuisines. With its “unique and virtues of national food” Georgia ranked fourth among the 48 European cuisines following Italy, France and Spain in the Thrillist’s list. Travel journalists Kevin Alexander and Liz said Georgian cuisine sat in the middle of the ancient

spice route between Europe and the Middle East and Asia. “So the country’s dishes are imbued with an incredibly rich and unique use of herbs and spices, like cilantro and dried marigold, that are used in combinations not seen in the other individual regions and are layered for bold but balanced dishes,” the authors said. They named Georgian Khachapuri, a cheese bread, as the ‘pinch-hitter’ of Georgia’s national dishes. It’s so popular that the country’s trying to trademark it to places like Panera.

TBILISI GLASS BRIDGE ON THE LIST OF 30 AMAZING BRIDGES OF THE WORLD Source: Architecture&Design.net

ENTERTAINMENT INDUSTRY OVERVIEW – COLLIERS INTERNATIONAL

he entertainment Industry in Georgia can be divided into four main categories: gambling, cultural entertainment, active entertainment, gastronomy & wine tourism. The main entertainment destinations are Tbilisi and Batumi, but several other locations throughout the country offer various entertainment activities. The government is actively supporting the development of the gambling industry in the county, which gives Georgia a competitive advantage in the region. The gambling industry accounts for about 70% of the entertainment industry’s total turnover, which equalled 1.2 billion GEL in 2013. Several international hotel brands are going to open casinos during the next three years. Georgia – country of ancient culture – offers visitors a wide variety of museums and theatres, concentrated mainly in Tbilisi (Georgian National Museum, Ethnographic Museum, Tbilisi Concert Hall, Rustaveli and Marjanishvili Theatres). The main cultural attractions in Batumi include Ilia Chavchavadze State Drama Theatre and the recently opened Art and Music Centre of Batumi. The Opera House of Kutaisi and the Lado Meskhishvili Drama Theatre are important cultural destinations in Kutaisi. The only cinema operator in the county is the Georgian company Rustaveli Cinema JSC, which manages three cinemas (Rustaveli and Amirani in Tbilisi and Apolo in Batumi) and plans to expand further in 2015 by opening two new movie theatres in modern shopping centres in Tbilisi totalling 15 screens. During the next two years several new projects will be completed around the country. The Natanebi Concert Hall, Tbilisi Fine Art Museum and the refurbishment of the Tbilisi Opera house are the major planned projects. The Government of Georgia is actively seeking to hold international sports tournaments in the

country and some of them are already planned, such as The Youth Olympic Games 2015 and the UEFA Super Cup 2015. The country’s main stadiums and sports complexes are concentrated in the capital Tbilisi (Boris Paichadze Tbilisi Dinamo Arena, Mikheil Meskhi Stadium and Tbilisi Sports Palace) which will see the development of new sport facilities, such as the new rugby stadium and a new tennis complex. A new football stadium in Batumi and a rugby stadium in Kutaisi were recently announced. The three main winter resorts – Bakuriani, Gudauri and Mestia – include 40 ski runs with a total length of 81 km. From the 2014-2015 winter season artificial snow machines have been installed in Gudauri and Bakuriani. This will significantly help to increase occupancy of Georgia’s winter resorts compared with the previous year. The Government of Georgia is actively promoting the development of the new ski runs on the mountain Tetnuldi in Svaneti and the territory of Goderdzi Pass on the border of Adjara and Samtskhe –Javakheti regions. The restaurant market is the most developed sector of the Gastronomic industry in Georgia. The Modern Café-Bars and international cuisine market is growing fast, mainly in major tourism destinations – Tbilisi and Batumi. Night clubs are concentrated mainly in Tbilisi and Batumi. Georgia is one of the oldest wine producing countries in the world. Up to 500 indigenous grape varieties are still cultivated in Georgia. UNESCO added the ancient traditional Georgian winemaking method using the Kvevri clay jars to the UNESCO Intangible Cultural Heritage Lists. Kakheti – the main wine producing region of Georgia – is becoming more and more attractive for international visitors. Several recently developed high class hotels offer customer wine tours and the sector has further potential for development.

BANK

caucasian business week

TBC BANK TRADE FINANCE DEAL NAMED AMONG TOP 15 GLOBAL TRANSACTIONS IN 2014 BY TRADE & FORFAITING REVIEW

rade and Forfaiting Review (TFR), a leading trade and supply chain finance information resource, named one of TBC Bank’s transactions among top 15 deals in the world. Other winners of the magazine’s annual Deals of the Year Awards program included transactions by HSBC, RBS, Deutsche Bank, IFC, Citi, ING, Société Générale, ABN AMRO, and BNP Paribas. TBC Bank’s winning transaction is a Letter of Credit issued for the import of the artificial snowmaking equipment. The equipment enabled the Georgian Mountain Resorts Development Company to offer successful ski seasons at the popular Georgian destinations of Gudauri and Bakuriani, regardless of natural snow cover. When choosing winning deals, the judges considered the structure, external environment, strategy and context of eligible transactions. The top 15 deals were selected out of 180 applications and 145 core transactions worldwide. “This deal was a shining example of how a letter of credit, a crucial trade finance instrument, could

transform a local economy, bringing much-needed forward bookings to the Gudauri Ski Resort. It was so good to see the EBRD and Raiffeisen Bank’s support in such a transforming project. When we saw this entry, the judges and I knew that this was something special – and it made us want to come skiing in Georgia!” commented Clarissa Dann, the Editor of Trade & Forfaiting Review. “We are very proud of this exceptional achievement in trade finance and corporate banking. Our transaction was recognized as one of the best among deals completed by the world’s leading financial institutions, which is a testament to the outstanding expertise and commitment to excellent customer service of our Trade Finance team,” commented Vakhtang Butskhrikidze, Chief Executive officer. Trade & Forfaiting Review is a leading trade and supply chain finance magazine, it was first published in 1992 and its Deal of the Year Awards is one of the most anticipated awards programs in the industry. Winning deals are recognized at TFR’s Cross-border trade forum 2015 on March 18 in London.

February 16, 2015 #87

TBC BANK SUMMARIZES RESULTS FOR 2014

BC Bank held a press conference, where TBC Bank’s CEO Vakhtang Butshkhrikidze summarized the results of the year 2014. TBC Bank’s main achievements in 2014 were as follows: • TBC Bank became the #1 bank on the Georgian retail market according to individual deposits and loans (TBC Bank had a 33.7% share on the individual deposits market and a 29.7% share on the loans market). • TBC bank made the largest public offering among Georgian companies on the London Stock Exchange. • TBC Bank successfully finalized the merger of Bank Constanta and increased its microfinance portfolio by up to 40 million laris. TBC Bank’s major financial indicators grew dynamically in 2014. In particular, total assets grew to GEL 5.43 billion; loans disbursed to clients totaled GEL 3.7 billion, the balance on client accounts was GEL 3.22 billion and shareholder equity was recorded at nearly GEL 2 billion In 2014 loans to individuals grew by 38.5%, retail deposits by 22.8%. Additionally, the growth of corporate loans was 6.5%, and corporate deposits – 1.6%. Loans to SMEs grew by 36% and the deposits of SMEs grew by 12.4%. As for the micro-segment, after the merger of Bank Constanta, micro financing became one of the top priorities of the bank. As a result, TBC Bank decided to purchase ProCredit Bank’s loan portfolio with a volume of up to 40 million. This will enable the bank to develop its activities in the region and increase its market share within the micro-segment. In 2014, TBC Bank made the largest initial public offering among Georgian companies on the London Stock Exchange. As a result of this IPO, TBC Bank raised USD $259 million and increased the company’s value to USD $640 million. 2014 was also marked by changes in the management of TBC Bank. The bank invited the top managers of the world’s leading banks (Barclays, Deutsche Bank, and Unicredit Group) to lead in various directions: Giorgi Tkhelidze was invited

as a Risk Management Director, Nikoloz Kurdiani as Microfinance Director, and David Tsiklauri as Corporate Banking Director. In 2014, TBC Bank gained several aknowledgements from various prestigious publications such as Global Finance, Euromoney, EMEA Finance , The Banker and PWM. TBC Bank was the first Georgian bank to receive the awards in the categories of Best Personal Banking (The Banker and PWM) and The Bank with The Best Corporate Social Responsibility (EMEA Finance Europe Banking Awards). In 2014, TBC Bank was active in its CSR. The bank implemented several large projects. TBC Bank traditionally supports arts and culture. As such, for the annual Saba Literary competition, TBC bank implemented an exclusive project called The Voices of The Époque, which was based on the archive records of Georgian poets and writers. Georgian artists created musical pieces, choreography and photography especially for this project. This year’s awards ceremony was the most largescale in the history of the Saba competition. In 2014, TBC Bank continued to finance several culturally and socially significant projects. Among these projects include the Saba Electronic Book-house and the Artarea Culture Channel. The bank also financed several initiatives on promoting Georgian artists abroad. In addition, it created free art space for contemporary artists, the first ‘Art Wall’ in the city. For the first time in Georgia, TBC bank as a private business, got involved in financing cinema and implemented a joint project with the Cinema Centre.

February 16, 2015 #87

BANK

caucasian business week

BUSINESS

February 16, 2015 #87

caucasian business week

NATAKHTARI SALES VOLUME REACHED 100 MILLION LITERS IN 2014

ompany Natakhtari in year 2014 achieved recording production volume and sold more than 100 million liters, which represents a unique figure for the Georgian market. Natakhtari has been producing beer and lemonade since 2005. It had already acquired over 50% of market share by 2008 and has been improving it since then. Achievement of 100 million liters output is a result of the Company’s efficient strategy, stable quality and consumers’ loyalty. In addition, it is a strong proof that Natakhtari products are liked by consumers in Georgia as well as abroad. In 2010 the Company started re-equipping and increasing the production capacity. Bottling lines got renewed, additional brew house was constructed, the number and volume of beer storage reservoirs increased. Currently the Company fully meets demand of the Georgian market even during the hottest season. COMPANY’S TOP PRIORITY IS TO FOLLOW HIGHEST STANDARDS IN FOOD SAFETY, AS WELL AS TO PROTECT SAFETY, HEALTH AND WELFARE OF EMPLOYEES, THEREFORE NATAKHTARI IS THE ONLY COMPANY IN GEORGIA,

CERTIFIED WITH ALL AVAILABLE ISOS WHICH MAKE OUR PRODUCT SO DISTINCTIVE AND UNIQUE. THOSE INTERNATIONALLY RECOGNIZED STANDARDS WE POSSESS ARE: ISO 9001 (QUALITY MANAGEMENT SYSTEMS); ISO 22000 (FOOD SAFETY MANAGEMENT SYSTEMS); ISO 17025 (GENERAL REQUIREMENTS FOR LABORATORY COMPETENCE AND CALIBRATION); HACCP (HAZARD ANALYSIS AND CRITICAL CONTROL POINTS); ISO 50001 (ENERGY MANAGEMENT SYSTEMS) AND MOST IMPORTANTLY OHSAS 18001 (OCCUPATIONAL HEALTH AND SAFETY MANAGEMENT SYSTEMS). Company Natakhtari cares for development in technical, technological and professional directions. For this purpose millions of dollar investments are being made. The Company is proud of its team of professionals and successful projects. Monde Selection Brussel’s Gold Medal was the proof of recognition, high production standards and stable quality. The year 2014 was extremely successful for the company. We offered our consumers well-known

Czech Brand Kozel, German Brand Herrenheuser and German (Bavarian) renewed Kaiser – produced under license in Georgia. Lemonade is a successful product as well. The volume of its export increased by 35%. Lemonade is being exported in 20 countries.

Growth of company production is related with the fact that consumers give preference to local products more and more, which is a positive fact. We would like to thank our consumers for their loyalty. Their support is a motivation for us to introduce innovations on the market.

FOODPANDA ACQUIRES COMPETITORS IN 7 ASIAN MARKETS Expands leadership in India, Malaysia, Singapore, Philippines, Pakistan, Hong Kong, and Thailand

lobal online food delivery company foodpanda(www.foodpanda.ge) today announces that is has fully acquired key competitors in 7 countries and thereby consolidates its leading position across the South-EastAsian and Asian food delivery market. Globally, the company is active in 39 countries on five continents. foodpanda acquired competitors in India, Malaysia, Singapore, Philippines, Pakistan,, Hong Kong, and Thailand.

After acquiring TastyKhana in November 2014, foodpanda also acquires the Indian business of JUST EAT, expanding foodpanda’s leadership in the biggest food delivery market in the world. JUST EAT India was launched as HungryBangalore in 2006, before JUST EAT plc acquired a significant share in the business in 2011. foodpanda has been present in the Indian market since 2012. Together with TastyKhana and JUST EAT, foodpanda is now present in over 200 Indian cities and partners with over 12,000

restaurants in the 1.3 billion inhabitant country. Together with foodpanda and TastyKhana, the existing JUST EAT-management team will aim for the best customer service when ordering food online in India. With this, foodpanda group now manages the vast majority of online food orders currently taking place in India. In Malaysia, Philippines, and Singapore, foodpanda fully acquired Food Runner, which also has a franchise relationship in Indonesia. The food ordering business has been spun out

of E-Commerce operator DealGuru. Singapore-based Food Runner was founded in 2012 with the support and investment from Berlin-based Rebate Networks GmbH and Singapore-based Digital Media Partners (DMP) and operates the brands Room Service in Malaysia and Singapore, as well as City Delivery in Philippines. In all countries foodpanda already runs foodpanda.com.my, foodpanda.sg and foodpanda.ph, respectively. As a result of these acquisitions, foodpanda positions itself as clear market leader in another four key South East Asian markets, catering to its customers with over 1,200 partner restaurants in all major cities of Malaysia, Singapore, and Philippines. In Pakistan, EatOye has been acquired. The company with over 1,000 partner restaurants in 15 cities offers table reservations as well as online food ordering. Eatoye will continue to operate under existing management and together with foodpanda.pk offer the most convenient way to order food in Pakistan. foodpanda Hong Kong will integrate 4 brands to cement itself as market leader in Hong Kong, by acquiring Koziness.com, previously branded iDelivery, which also operates the brands Dial-a-Dinner, SOHO Delivery, and Ring-a-Dinner, which have been delivering food since ten years.

After the acquisition, foodpanda will optimize traffic between all four brand names - to offer for the best user experience. All brands will continue running, giving customers the chance to order their favourite meal from over 500 restaurants. In Thailand, foodpanda enters partnership with Food By Phone, which despite of its “phone”-like brand name has been fast growing in its online marketplace for food deliveries. Food By Phone has been a pioneer in the Thai food delivery service, working with the best restaurants in Bangkok since 1998. Its partner restaurants will also be available through foodpanda. co.th website and mobile application. Customers can choose from over 650 restaurants in three of Thailand’s biggest cities. RALF WENZEL, Co-Founder and CEO of foodpanda group: “With the recent acquisitions foodpanda becomes the market leader across South East Asia. The combined expertise and experience of several great local companies allow us to significantly improve our offering and service to our customers.” Weeks after a series of acquisition in Europe, the foodpanda group now also gained a leading position in South East Asia, next to its other core markets in India, Russia, Brazil and Mexico.

February 16, 2015 #87

CURRENCY caucasian business week

BACK TO THE FUTURE FOR THE US DOLLAR BY JOHN J. HARDY, Head of FX Strategy, Saxo Bank A/S

ntil the January US jobs data was released on Friday, February 6, the currency market had gathering doubts on whether the US recovery is strong enough or the market environment supportive enough to ever trigger a rate hike from the Federal Reserve. After a number of weak secondary US economic data points in January and the obvious risk of very low inflation in the near term from the US from collapsing oil prices and a strong USD, the market had once again pushed the first anticipated Fed rate hike all the way out to around the September 2015 FOMC meeting. And this came despite a notable shift to the hawkish side at the December FOMC meeting and a misinterpreted January FOMC meeting statement, in which the Fed merely noted that it is watching the international environment as a factor in deciding when to raise rates, even as it upgraded its assessment of the strength of the US labor market. But the January US employment report changed everything. First, the release of the January change in nonfarm payrolls data slightly beat expectations as it showed the US economy adding 257k new jobs in the month. This was about 30k more than expected, but on top of this, the November and December payrolls data were revised massively higher, showing a growth of almost 150k more new jobs beyond the original estimates. November, in fact, was one of the strongest months for US jobs growth in the last twenty years. As well, a strong rise in average

hourly earnings and an upward revision of weak December earnings numbers laid fears to rest that US workers face weakening wage growth. The market is ignoring strong US data at its own peril, having been too focused on what is going on in the rest of the world in central bank policy terms. The assumption has perhaps been that the crazy BoJ experimentation with monetary base expansion, QE finally coming to Europe, and recent rate cuts in Australia and Canada are rubbing off on the Fed’s potential to ever hike rates. And it’s easy to understand this thinking – after all, as I can’t remember who recently pointed out, no professional in the finance industry under the age of 30 has ever seen a Fed rate hike, as the last one took place almost nine years ago. It hasn’t paid to believe in a hawkish Fed. But we will see a Fed rate hike soon. If we see a strong US jobs growth in February, look for the FOMC to begin signalling a rate increase at its June meeting, and if the jobs market continues improving at its recent pace, the Fed is way behind the curve on how much it will need to tighten in the near term. And the market is even further behind the curve on the implications for the US dollar. It looks to me as if the USD rally is fully back on track. The FOMC cares far more for its dual mandate at home – full employment and inflation – then it cares that the US dollar is used as the world’s reserve currency and that tighter USD liquidity after the end of QE and on eventual rate hikes risk in inflicting massive pressures on emerging markets and China.

GREECE UNCERTAINTY TO SUPPORT US DOLLAR BULLISH TREND

ast week until the release of NFP data on Friday, it looked like a corrective pull-back for the US Dollar might have just been triggered on the back of widening US trade deficit and modest pace of growth as reflected in ISM manufacturing PMI. However, Friday’s jobs report, that surpassed even the most optimistic estimates, helped US Dollar to erase majority of its weekly loss. In the first month of 2015, the US economy created 257,000 jobs, while the unemployment rate saw a slight up-tick to 5.7% from 5.6% in December. The rise in unemployment rate could be because of higher labor market participation, which is a sign of healthy labor market. Another good sign from the jobs report was a 0.5% rise in average hourly wages, that saw a decline in December. In other important developments that surprised the market last week was the Australian central bank’s decision to cut its key benchmark interest rate to a record low of 2.25%. The varying effect of various economic developments helped the overall US Dollar Index (I.USDX) to end the week on a flat note, nearly unchanged for the previous week. Moving ahead, the Forex market will now look for additional cues to gauge the strength of broader US economic recovery from this week’s monthly retail sales data from otherwise a tepid US economic calendar. The US monthly retail sales data is scheduled for release on Thursday and following a sharp drop in December, market participants are again expecting a subdued performance in January. Consensus estimates forecast the retail sales to have declined by 0.3% in January, while core retail sales are expected to drop further by 0.4%. Along with the US retail sales data, preliminary University of Michigan’s consumer sentiment index is scheduled for release on Friday. The Preliminary University of Michigan’s Consumer Sentiment Index reading for the month February is expected to improve marginally to 98.2 from

98.1 in January. Apart from the US economic data, the political stand-off between Greece and Germany over extension of the current Greek bailout terms, agreed upon by the old government, will remain key concern from the Euro-zone. The Euro-zone finance ministers are holding an emergency meeting on Wednesday to discuss the possible resolution to the Greek drama. The current agreement expires at the end of February and a failure to negotiate an amicable deal would force Greece to default on its debt. This could trigger some additional volatility in the market and seriously deteriorate the value of Euro-zone common currency, Euro, against other major currencies. Dominant Australian data, that could materially impact the currency market include Australian employment report, scheduled for release on Thursday. After printing a surprisingly strongerthan-expected rise in the number of people employed for four months out of the past five readings, economists are anticipating a decline for the month of January. Consensus forecast the report to show a negative reading of 4,700 for the month of January and the unemployment rate is also expected to tick higher to 6.2% from 6.1% recorded in December. Also watch out for inflation data from China, Australia’s largest trading partner, scheduled for release on Tuesday. Following the global trend, Chinese inflation has been trending lower in recent months. The trend is further expected to continue in January and drop to 1.1%, down from 1.5% recorded in December. Last week’s strong NFP data seems to have convinced market participants that the Fed is more likely to hike rates sooner rather than later, possibly in the middle of this calendar year. Moreover, the ongoing Greek uncertainty, which could eventually lead to Greece exiting the Euro-zone, seems to continue supporting the US Dollar bullish trend into the second week of February. Admiralmarkets.ge/analytics/ facebook.com/adimralmarketsgeorgia/

E G . W B C . W WW

PUBLICITY

caucasian business week

February 16, 2015 #87

PUBLICITY

caucasian business week

PUBLICITY

caucasian business week

February 16, 2015 #87