FOREIGN INVESTMENTS IN EFFECTIVE USE

The cotton industry in Azerbaijan having evolved over centuries, has brought about many benefits, the main one is strong technical skills, a well-developed cotton-growing industry and professional experience.

Successful implementation of agrarian reforms and handing over of the cotton industry to private agencies stimulated creation of favorable conditions for development of this industry in Azerbaijan.

Encouraged by conditions created for entrepreneurship development in accordance with the economic strategy of the country, AzerCot Ltd pays special attention to the development of the cotton industry. AzerCot Ltd was established in Azerbaijan in 2002 with the assistance of American and Azerbaijani legal entities. The primary activity of the company is cotton growing and it is further progressing into high-quality cotton fibre assigned for export to various parts of the world.

Up-to-date manufacturing equipment has been imported and installed to meet modern requirements in processing of raw cotton.

At present this equipment is being used at Legno-Imishli and Legno-Neftchala cotton-processing plants (formerly Imishli-Pambig JSC and Neftchala-Pambig JSC respectively) operated by AzerCot Ltd. This equipment cost the company $1.2 million.

To increase productivity of raw cotton, AzerCot Ltd has worked out an assistance program to support farmers. AzerCot Ltd applies the latest manufacturing methods and technology to instruct farmers and improve cotton growing. Farmers are rendered financial assistance to purchase fuel, pay wages to machine-operators and plough cotton areas.

Agricultural equipment rented by farmers or used by the company for land plowing are also included as part of the financial assistance. A token amount for service rendered is retained from the payment to a farmer. All systems at these plants are computerized and electronic scales have been installed at both plants.

All processes starting with financial assistance on land plowing to harvesting up to precise weighing of gathered production are implemented in a transparent manner. Thus, reduction of the human factor to a minimum in the process of processing raw cotton stimulated stable growth of trust of farmers towards AzerCot Ltd.

According to the results of 2005, AzerCot Ltd has gathered 28,539 tons of cotton from 19,754 hectares according to the contracts with farmers. In other words, gathering of

harvest exceeded 14.5 centners from each hectare. In future, this indicator is expected to grow as new varieties of cotton are used.

Every year the 3 cotton-processing plants operated by AzerCot Ltd produce approximately 10,000 tons of cotton fibre and 14,000 tons of technical seeds. The cotton fibre processed at the processing plants of the Azerbaijan Republic is middle fibrous and has a specific yellowish color that makes it different from other cottons like American cotton. Since 1998 Azerbaijan has embraced new standards on cotton fibre approved by the Liverpool Cotton Association.

At present the company cooperates with farmers on the basis of purchase-sale contracts, arranges sowing of cotton and its processing at the cotton-processing plants and sells the product in domestic and foreign markets. Besides cotton cleaning and technical production of seeds, the company also deals with production of cotton-seed oil, cotton-cake, cotton-seed husk and fatty acids and has been successful in selling in both overseas and domestic markets.

AzerCot Ltd guarantees good quality of manufactured products and timely deliveries.

AzerCot Ltd invites all interested parties for mutually beneficial cooperation and guarantees reliable partnership relations.