DIAPERS for ADULTS DIAPERS for CHILDREN:  Annual Demand of the Russian Market of Diapers for Adults Is 700 Million Pieces Per Year

Home , Rostov

ABSORBENT UNDERWEAR AND Development Corporation Yaroslavl Region CONSUMABLES MANUFACTURING Investment Project 2 MARKET OVERVIEW

DIAPERS FOR ADULTS DIAPERS FOR CHILDREN:  Annual demand of the Russian market of diapers for adults is 700 million pieces per year.  Capacity of the diaper company in the Kaluga region is 180 million pieces per year.

Diapers for adults Manufacturing Diapers for children Manufacturing Foreign manufacturers 14% Иные производители ИныеForeign manufacturers (Happisпроизводители) Russian manufacturers(Seni) Russian manufacturers 10% Россия Россия I этап 86% 90%

Name of the product Cost per 1 piece Name of the product Cost per 1 piece

Lenta (a Russian chain store company) RUB 26.17 Lenta and Auchan diapers for children RUB 6.67 and Auchan diapers for adults 3 STATE INCENTIVES

Creation of modern national innovative, competitive and balanced industry for manufacturing and sales of personal items for physically challenged people

Ministry of Industry and Trade - Subsidies available to Russian companies to partially compensate capital expenditures to conduct R&D and design & experimental works performed in 20017-2019 in the framework of implementation of complex investment projects aimed at rehabilitation products and equipment manufacturing establishment. (Government of the Russian Federation executive order No. 76 of January 25, 2017). Financing structure, RUB M 2017 2018 2019 400 400 400 Subsidies available to Russian companies to partially compensate capital expenditures made in 2017-2019 at complex investment projects implementation aimed at rehabilitation products and equipment manufacturing establishment. (Government of the Russian Federation executive order No. 77 of January 25, 2017). Financing structure, RUB M 2017 2018 2019 100 100 100

establishment of affordable local FMCG manufacturing to replace Import Substitution matching imported FMCG Methodical recommendations on providing disabled people with technical MINISTRY OF HEALTHCARE means of rehabilitation within the Federal Register of Rehabilitation OF THE RUSSIAN Procedures, Technical Means of Rehabilitation and Services Provided to the FEDERATION Disabled People by Ministry of Healthcare of the Russian Federation No. 2317-VS of May 05, 2006 4 DESCRIPTION OF INVESTMENT PROJECT FOR ABSORBENT UNDERWEAR PRODUCTION

Products: Production volume: • Diapers for adults 86.4 M pieces per year • Diapers for children Manufacturing facility area (lease): 15 000 m²

Project Cost: RUB204.5 M • Equipment – RUB156 M • Operations – RUB 48.5

Terms of Financing: Payback period: TERRITORY OF ADVANCED SOCIAL AND Internal funds - 30% ECONOMIC DEVELOPMENT – 4 years Borrowed funds-70% Loan rate-11% EX INCENTIVES – 5 years 5 SPECIAL REGIONAL TOOLS FOR INVESTMENT SUPPORT

NAME OF THE TOOL INCENTIVES AND BENEFITS

0% profit tax rate within 5 years, 10% in the next 5 years 0% land tax rate within 3 years, 0,3-1,5% afterwards Territory of Advanced Social and 0% property tax rate within 5 years , 1,1% in the next 5 РАЗДЕЛ Economic Development years 7,6% total volume of social insurance contributions within 10 years

0% profit tax within the contract term Accelerated amortization of capital assets Special Investment Contract (SPIC) State owned land lease without bidding SPIC participant will be the sole state procurement supplier Guarantees against tax legislation worsening

12,5% profit tax payable to the regional budget (in the project only) Priority Investment Project 0% property tax (in the project only) 0% transport tax (in the project only) Regional bank guarantees

0% profit tax payable to the federal budget within 10 years Regional Investment Project 10% or less profit tax payable to the regional budget within 5 years Natural resources excavation tax rate cuts

12,5% profit tax payable to the regional budget (in the project only) Industrial Park 0% property tax (in the project only) 0% transport tax (in the project only)

Federal Fund for Single Soft loans at 5% annual of up to 40% of the project cost Industry Towns Support Funding of utility infrastructure construction (Gavrilov-Yam, Rostov, Tutaev) AVAILABLE SITES FOR MANUFACTURING FACILITY 6 LOCALIZATION: TERRITORY OF ADVANCED SOCIAL AND ECONOMIC DEVELOPMENT IN TUTAEV

. 0% profit tax rate within 5 years, 10% in the next 5 years . 0% land tax rate within 3 years, 0,3-1,5% afterwards . 0% property tax rate within 5 years , 1,1% in the next 5 years . 7,6% total volume of social insurance contributions within 10 years . accelerated VAT refund procedure (10 days)

 38 km to Yaroslavl (M8 Moscow-Kholmogory federal motorway)  300 km to Moscow

Russian National Classifier of Types of Economic Activity (OKVED) – 21.22. “Diapers” OKVED for Territory of Advanced Social and Economic Development in Tutaev – “Production of medical drugs and materials used for medical purposes” WELCOME TO THE YAROSLAVL REGION!

Development Corporation Yaroslavl Region

71a, Svobody Str., Yaroslavl 150014 RUSSIA Tel.: +7 (4852) 230-230 е-mail: [email protected]