MKT - COMBINED USING OF PROGRESSIVETECHNOLOGIES INVESTMENTS AND INNOVATIONS OF "MKT ISTEHSALAT KOMMERSIYA" LLC PROMOTING OF REGIONS' DEVELOPMENT

Exclusive interview of General Director of "MKT Istehsalat Kommersiya" LLC, Mr. Ikram Karimli

Cotton-growing business in Azerbaijan during many centuries created in this field material-technique base, culture, experience and interest. Successful agrarian reforms done in the country and also cotton-growing formation into private sphere contributed to development of stated field. "MKT Istehsalat Kommersiya" Limited Liability Company (LLC) inspired with enterpreneurship development in the economy policy pay special attention for development of cotton-growing.

Mr. Karimli: "MKT Istehsalat Kommersiya" LLC is the first cotton-growing company in Azerbaijan. Which opportunities does your company have at present?

It is true, company was established in 1997 and named as Industrial-Commercial Firm (ICF) "MKT". In 1997 cotton-clearing plant of the Republic were declared as open for privatization. One of the companies actively took part in privatization of stated units became ICF "MKT". Company got the share holding of JSC "Saatli-Pambig", "Yevlakh-Pambig", "Beylagan-Pambig", "Bilasuvar-Pambig", "Salyan-Pambig" and Ali-Bayramli Fat-and-Oil Complex at $8 mln.

In result of held privatization MKT manages with 14 cotton plants. In 1997 MKT activity began from cotton purchasing sowing by the Ministry of Agricultural in kolkhoz and sovkhoz. That time the farm economies were little. Since 1997 there was supplied from Turkey 7 new types of cotton 5 of which justified itself in the Azerbaijan conditions. Our aim is that Azerbaijan cotton be highly thought of international markets. At present these new types have already highly thought in the markets not worse than Uzbekistan cotton. This is main work which is carried out for improvement of production quality.

We should note that beginning from 1990 the cotton production reduced in the Republic from year to year and in 1997 in kolkhoz and sovkhoz economies of Azerbaijan there were gathered from each hectare of cotton area 114,8.000 ha the minimal quantity - 5,8 centner of cotton. In this connection, at the same time we began to finance the yield of 1998 and directed to the field approximately $20 mln. It was the highest index of the year for us and there was sowed 120.000 ha. The contracts had been concluded both with farm economies and kolkhoz and sovkhoz. However, in 1998 kolkhoz - sovkhoz bureaucrats which did not wish to make it up with new market relations and were dissatisfied that whole field passed to private hands and made the sabotage. According to specialists' forecasts during the stated year were sowed 200.000 tons of cotton of which we could gather only 93.000 tons. In result of sabotage our company met with losses at $12 mln. It had very negative influence to company which has just begun its activity and rarely company was able to continue its mission after it.

Due to right formation of management and relations with foreign partners we could stand but next year we had to reduce the sown areas up to 60.000 ha and since 1999 according to new policy of the company we began our development.

With the aim of successful fulfillment of operation "MKT Istehsalat Kommersiya" LLC management elaborated the program for supporting of farmers. In this connection, company implements the using of progressive technologies and more improved technology methods for farmers' instruction and cotton growing. Thus, farmers are provided with finance means for buying of fuel, wages' payments to machine operators and cotton areas' irrigation. The agricultural techniques are delivered here which or rented for farmers or company fulfills arable operations in the area of the farmer by stated technique, and the service cost rendered for farmer is deducted from the sum of the farmer for the cotton-wool.

There began in Azerbaijan the strongest drought and non-yield during 2000-2001 and these years were quite difficult. This period the price for cotton in the world market reduced and we had to sell the cotton fiber by price of cotton wastes. But we could stand due to detail analyzing implemented of well-founded, fundamental operations for receiving of cotton production meets to world standard in the most difficult period and is able to keep the market competitive, also supplied new technologies, improved management and beginning from 2002 the company became strong.

At present instead of 14 old cotton plants only 7 technological enterprises operate and for their reconstruction were spent approximately $4 mln. The most unprofitable technologies were stopped.

The power of our plants is enough for the large volume of cotton because when Azerbaijan gathered 1 mln tons of cotton it had been processed at these plants. It is true that all of these technologies are old but new plants were equipped with the same calculation that the power of the plants will be able to be expanded due to extra equipment. Within the former of Soviet Union these plants processed 1 mln. tons but they operated whole year. Usually the cotton is processed during 4-5 months. If the cotton is kept for a long it will have negative influence to its quality. For instance, if the raw cotton is processed during 4-5 months then 80% of production will be the first class, and if it is processed during a year then just 50% of cotton will be lower quality. This is the main reason why its processing should be fulfilled for the shortest time.

At the same time, company began to use the experience of contracts concluding with the raw cotton farmers-producers. As a result for a year in 15 regions of the Republic, from 20 of raw cotton producers there are concluded in average 15.000 such contracts.

At present company cooperates with the farmers on contract about growing of raw cotton, organizes cotton's sow, provides with raw cotton supplying, fulfills its processing in cotton clearing enterprises and organizes the selling of final production. 90% of own production is exported into different countries of the world.

Since April 22, 2002 "MKT Istehsalat Kommersiya" began to implement its own activity as Limited Liability Company according to Law "Regarding Limited Liability Company" and Public Codex of the Republic of Azerbaijan.

Today, "MKT Istehsalat Kommersiya" LLC produces up to 2000 tons of cotton wastes - uluk, lint and fuzz receiving within processing of raw cotton and sell this production in the domestic and external markets.

The main sphere of company's mission is preparing, processing and selling of cotton fiber, processing of and selling of cotton oil from cotton seeds and also the processing of cotton yarn with different numbers which can be offered for selling and export.

In this connection we rented for a long time Gandja spinning complex, spent for its construction one more $0,7 mln. and came to market not only with cotton but also with cotton yarn. As a result there was organized the right operation on trade with cotton and cotton yarn with Russia and presently, our production got the leading place by selling of both cotton & cotton yarn in the Russian Federation.

In MKT operation with farmers occurred some serious changes. MKT today - unique company in Azerbaijan where has satellite online communication with all plants. The computers at plants connected via satellite with MKT head office and in online regime all actions at the plants in regions reflected in central computer in Baku. There was installed electronic scales and whole process computerized. Person factor in receiving of cotton and in the process of processing reduced for minimum. It contributed to receiving of more big entrust of farmers to MKT because all process is clear, beginning from providing of facilities for financing of yield and land plowing to crop's gathering. After full technique modernizing and computerizing of all process of cotton's processing we began to occupy with Fat-and-Oil Complex in Ali-Bayramli renamed as JSC "Ali-Bairamli Yag-Piy" which is owned by MKT. However, at present day the enterprise operates with old equipment and therefore the plant is unprofitable. This year we purchased new equipment, there is fulfilled the construction of new corpus and I hope to beginning of new season, in September of present year there will be commissioned the new plant's line.

Which directions does company plan to develop in further?

We privatized in Baku of not completed plant's construction "Stator" (on Heydar Aliyev ave.). Since last year there was commissioned in the territory of plant the machine building area where with own forces are implemented almost all repairing operations regarding agricultural and technological equipment. Since the end of last year there was commissioned in the territory of plant the plant by cold rolling metal. In this connection, in the nearest time there is planned to develop of metallurgical company's direction. At that place we plan to build cotton-spinning factory. At present, there is conducted the construction of textile factory which will produce acrylic and half-woollen yarn. Project's investments have already exceeded $5 mln. Generally, on the base of former "Stator" plant will be established the textile complex from processing of raw cotton to producing of final production, hotel-office, machine building complex, the plant for cold rolling metal and the plant for processing of acrylic production.

You will ask why company did occupy with acrylic? The operation for selling in the Russian market of qualitative yarn opened new empty niche (synthetic fiber is close to wool) after seeing decided to create of new production. In the Russian Federation the demand is always in high level. In further company plans to realize the development of production and acrylic half-woollen production.

Except of plant and Gandja Spinning Factory we plan in future to develop the textile on the base of one of cotton plants remaining in the territory of Azerbaijan.

Administrative corpus of plant located on the way of airport and Heydar Aliyev avenue. Taking into consideration that in his addressing the President of the Republic of Azerbaijan Ilham Aliyev not ones declared that the way from the city to airport should be more equipped with modern amenities, including with modern infrastructure and buildings. We were the one who began this process and there is completed the construction of facade part of A-class office-hotel complex. I would like to note that there is no such kind of office building in Baku thus far. Besides of our company in office-hotel complex will be based other companies too. In nine floors corpus, two floors wings and there is four floors corpus in back. During the year we plan to complete the construction of this corpus which will be the one of the most beautiful buildings of Baku City.

Which attention does MKT pay to social living and development of sport in the Republic?

At the beginning of 2004 we rented for a long term the football stadium in Imishli and founded the sport club "MKT-Araz". In the structure of Club there operates football team "MKT-Araz" and sport team on wrestling. Club's history - less than year but on the base of specialists' opinion for today our team is one of the perspective teams in Azerbaijan and we have the real chance to win the Cub of Azerbaijan.

By the beginning of next football season we plan to complete the construction of stadium which completely will meet to European standards. Further we will build new complex for wrestling in the center of Imishli which also will meet to European standards. Our wrestlers are training in old building which was repaired by us and gave them for their working. At present within the frame of sport supporting we invested approximately $2,5 mln.

Beside of in every region where MKT participates we strive to solve of all types of farmers' problems. We plan in villages where the good figures of cotton gathering to take patronage of schools for providing their present and full repair with finance.

What the company's mission is reinforcing in the international and local arena now?

On April 2003 "MKT Istehsalat Kommersiya" LLC was selected as associative member of Liverpool Cotton Association. Today, "MKT Istehsalat Kommersiya" LLC enjoys by company's image fulfilling of own obligations in the world market in full volume and in accordance with requirements of Liverpool Cotton Association. During these years "MKT Istehsalat Kommersiya" LLC regularly have expanded the activity with serious investments projects in Azerbaijan.

The first stage of agrarian reform in the Republic of Azerbaijan stand in past. The agrarian reforms held in the Republic created the conditions for withdrawal of all agricultural fields from State monopoly including the cotton industry and their transformation into private field. As a result in 2003 we achieved the crop in 16,3 centner from a hectare and in 2004 - 17,25 centner.

State program for social-economy development of regions of the Republic of Azerbaijan (2004-2008) became the important stages in the development of agricultural. In State program the special meaning is paid to development of cotton industry which play the major role in the agrarian reforms.

Thanks for your interview.