Home / Economy / What are the Development Perspectives for Produce in Georgia Beneficiary Companies?

What are the Development Perspectives for Produce in Georgia Beneficiary Companies?

Fifteen companies financed under Produce in Georgia state program will try to operate on the market independently. The issue is of companies that have completed 24-month cooperation period with Entrepreneurship Development Agency as part of the state program.

According to Entrepreneurship Development Agency of Ministry of Economy and Sustainable Development, twelve out of 15 companies are newly established startups, which have set up new businesses with the support of Produce in Georgia state program, while the remaining three companies have expanded and re-equipped the existing businesses under the mentioned program. Moreover, with the assistance of Entrepreneurship Development Agency, five companies make focus on exports markets and they have already exported 2 720 653 GEL products to foreign markets.

These 15 companies have made investments of more than 60 800 000 GEL.

Subsidies issued to these companies made up 6 899 329 GEL. They have transferred 12 969 167 GEL to state budget and this is a very positive indicator. It is important that these companies have created 470 new job places. In the future, the number of employees will considerably increase, because companies plan to actively expand production.

LLC ColorPack, LLC Decora, LLC GRC, LLC Made in Georgia N1, LLC Green Energy, LLC Hemoline, LLC Tissue Paper, LLC Geocap, LLC Inovas, LLC Energy Georgia, LC Poliedro, LLC Iseko, LLC GVG Plast, LLC Polimer Plast – these companies continue operation on the market independently from the state.

The Caucasus Business Week (CBW) has inquired how these companies plan to continue operation  on the market, whether they have created competitive product and whether they have resources to continue operation without state assistance.

Representatives of business companies state that this is a very important program, because 2-year grace period is huge support for business sector.

LLC Green Energy, wooden granules manufacturing company,  launched production of technologically and ecologically clean wooden granules in 2015. TBC Bank has issued 160 000 USD loan to the company. Under Produce in Georgia program conditions, Entrepreneurship Development Agency will cover 10% of loan’s interest rate  for initial two years”, Ministry of Economy said.

Investment value of LLC Green Energy project is 185 000 USD. The enterprise launched operation in village Manavi, Sagarejo District in February 2015, he said.

Key direction of Green Energy company is to process raw materials (biomass) to receive wooden granules, which is solid biofuel and is alternative to firewood and will reduce a use of firewood in the country.

LLC Green Eneregy considers all sectors, which actively use firewood, to be target markets in Georgia. According to preliminary estimations, the mentioned biofuel is a good alternative for reduction of expenditures in commercial sector (the company products are cheaper by about 10% compared to firewood).

LLC Green Energy director Temur Matiashvili explains that he has completed cooperation with Ministry of Economy, but the company is able to operate on the market independently. Currently, the company sells products in Tbilisi and plans to expand the distribution network to regions too.

Without Produce in Georgia program, it would be difficult to develop small businesses in the country, Matiashvili said.

Inovas pharmaceutical company was launched by financial support of Produce in Georgia state program in Lilo settlement in Tbilisi in 2015. About 4.5 million USD has been invested, including TBC Bank has issued 2 million USD loan.

The company manufactures ingredients that are necessary for medications. Inovas head David Ebralidze explains that starting November 2016 the company has been serving the loan independently. As a result, there are no problems in this respect. The enterprise works at full capacity and exports products to foreign markets.

This year the company plans to expand operation and invest about 6 million EUR, Ebralidze said.

«We plan to add new lines, new products and satisfy the demand on our neighboring markets. Currently, we manufacture ingredients fro medications», Ebralidze noted.

Currently the company exports products to Russia, Ukraine and Kazakhstan, he added.

«The program was very important, because the 2-year grace period is much stimulus. As to defects, we have not noticed anything», Ebralidze said.

Denola,tourism accessories manufacturing company, completed cooperation with Entrepreneurship Development Agency several months ago. The company director Kakha Mosidze explained that in 2015 the company received 2 million USD financial package and arranged production in Avchala. Produce in Georgia state program has considerably assisted the company in business inauguration and taking control over 70% of market ratio. Despite product from Azerbaijan is imported under dumping tariffs and this factor frustrates development of Georgian production, the company continues operation on the market, however, it will be good if the Georgian Authorities prioritizes domestic production, Mosidze said.

Woodmaster, which was financed as part of Produce in Georgia program, will complete cooperation with Entrepreneurship Development Agency in June 2018. The company director Kakhaber Jvarsheishvili explains that the company is very content with state program, because the company could not launch operation without this program.

Tax amendments approved by Government that exempts reinvestments from profits tax enables to return these funds back to production and develop business, he added.

We remind you that Woodmaster company took part in Produce in Georgia state program in 2017. Namely, National Property Agency  transmitted 12 595 square meter land plot for a symbol price of 1 GEL to LLC Woodmaster in Zemo Ponichala. It was said that the company planned to produce furniture, wood and wood products, all sorts of watches and their parts. The company is to invest 1 793 000 GEL in production.

Currently, Entrepreneurship Development Agency has supported 184 projects worth more than 384 million GEL, including in cinema industry and hotel business. It is also important that all theres projects have created 7 966 new job places as part of the mentioned project.

By the initiative of Georgian Government, starting June 2014 Ministry of Economy and Ministry of Agriculture launched a new state program – Produce in Georgia. Key objective of this program is to support business companies, create new enterprises, expand the existing companies and re-equip them with the aim to develop entrepreneurial culture and increase exports potential.