Leasing: good alternative


Pavlo Mukhin: up to 80 % of agricultural machinery is sold on lease. The leasing market is on the upswing and attracts more and more people and companies that preferred bank loans and credits before. Pavlo Mukhin, General Director of TEKOM-Lease, told Agravery.com about the core aspects.

What were the main trends of development at the leasing market over the last years?

People become more financially literate and see much more opportunities for themselves to get financial services, what is related to leasing at first. For this very reason, the supply of specific leasing services constantly grow. According to the data of the National Commission for the State Regulation of Financial Services for 9 months of year 2017, financial lease agreements were concluded in an amount of 9 330,7 million UAH, what is by 20 % higher than in the same period in 2016.

People consider this type of financing same as loans. In my opinion, it happens due to the spread of information and entry of big players to the market, such as OTP Leasing, Land-Lease, ULF-Finance and TEKOM-Lease. Furthermore, small leasing companies disappear at the market, and it is consolidating. The first five companies-leaders possess 80 % of the market.

Now, you can purchase cars, specialised machinery, equipment and immovable property on lease. If earlier only cars could be leased and leased out, now it is just 50 %, the rest is agricultural machinery and equipment. A very small percentage is for the immovable property.


As there are no such long-term and cheap resources in Ukraine. Leasing is not developed in this aspect.

How did the customers` attitude to leasing companies change?

All companies-leaseholders operating at the market cooperate with the same leasing companies. I`d like to specify this: 80 % of agricultural machinery and equipment is purchased on lease. That is exactly why we are principal partners for the agricultural business, especially for large agro-holdings. Presently, about 50 % of the portfolio is they exactly. So, of course, leasing companies are popular as people see their advantages as opposed to banks and loans.

What advantages?

Leasing companies provide a wide range of services. It is not just financing of transport, equipment, machinery, specialised machinery, but an integrated package of services. Leasing as a complex of services releases leaseholders from signing the whole package of documents (agreements for pledge, sale-purchase, insurance and so forth) by replacing all of this with one financial lease agreement. I also think that the terms, which leasing companies render financing services under, are more flexible than at banks. We can set a lower initial payment, increase the timescale of service provision. We also have a stiff approach to the customer`s financial status. It is highly important which facilities exactly are delivered on lease. Additional maintenance services, which banks do not provide, depend on it. That is, a lessor is interested in a client more than a bank as it is a smaller company sensible to fluctuations. If a client stops paying on lease, then it is a much more serious problem than for a bank. These companies do not have such sustainability yet. For this very reason we verify all the client`s information when we start working with a leaseholder.

How? What do you do exactly?

Companies employ a big number of analysts, appraisers, who analyse the business plan and financial status of the company. Only after this detailed analysis, we can sign an agreement. I think that bankruptcy may be in any form for business, but you should react to this when due, i.e. when losses are still minimal. As compared with the previous years, clients are analysed more carefully. Besides, there is an advance payment that partially covers risks. Advance payment is a share of private funds that is paid by a leaseholder. By adjusting the size of such a contribution, a leasing company may reduce its risks.

Who is your customer? What size of business is the most frequent customer?

Our customers are large and medium business, i.e. those who got used to working with a big number of machines and understand what leasing is. Small and microbusiness does not work with us in fact. In general, such companies do not conform to our requirements to the financial status of a leaseholder. Apart from this, farmers are not used to working with papers.

Who is your first competitor? And what are your distinctions?

Now, the business competition is very high, but leasing companies should compete with banks, first of all, not with one another. We should fight for a client and be flexible with him. But some banks started to work with leasing. There are big players such as OTP Leasing and ULF-Finance at the market. The largest company, OTP Leasing, is a part of the foreign bank, so it can be a bottom-feeder and offer services more beneficial than we do. The second place is taken by ULF-Finance that is more specialised in motor vehicles. Our company has the third place according to the Association of Lessors of Ukraine. Our distinction is that we work in such a segment, where no one else works – financing of infrastructure projects. We carry out the construction of facilities on a turnkey basis, and deal with the classical things at the same time. We make decisions so immediately and quickly, so we have good partnership relations with many companies.

Tell us about specific projects! Why do you finance the infrastructure?

We financed the acquirement by one large stevedore company of new expensive machinery for their work at the Odessa Port. That machinery consisted of a mechanical shiploaders NEUERO Shiploader SL1000, a belt conveyor NEUERO, BC 1200 type, and a combined system NEUERO Combiport, C600/1000. The total cost of this project was 7,34 million EUR. Another facility at the Odessa Port financed by TEKOM-Lease was construction of new elevator complex consisting of 8 silos of 29 m height each. The cost of this complex was 5,74 million USD. We cooperate with the large agro-holdings. One of such projects was financing of the full reconstruction of the elevator in an amount of 2,49 million USD.

How did you end the last year?

For the last year, the lease portfolio of the company had increased by 32 %, and is more than a billion Hryvnias now. We are in TOP-3 of leasing companies.

What are your plans for a future progress? What new services are you going to add to the package of services?

We will develop the leasing of infrastructure facilities. We are going to develop projects with the immovable property. We work in this aspect, but we do not have great results yet. We also want to upgrade skills of our employees, open new offices. But the most important is the personnel. We think it is a ticket to success. We introduce new techniques, create various software programs that should make business processes easier and optimise them. Furthermore, we negotiate with banks about the financing of our leasing packages. We have concluded agreements with some of them already. These banks are Pivdennyi, PUMB and Taskombank.

How do you see the development perspectives of this industry?

I think the perspectives for this industry are very high as people become more financially literate. More and more opportunities for using leases for personal everyday needs are created. In addition, new services will be introduced, and the price will be reducing. Leasing companies start cooperating with medium, small and microbusiness. For instance, small and microbusiness works only with leasing in Europe as they have to have a credit status at banks. Therefore, everyone goes to leasing companies so to get this credit status and prove that he is financially disciplined.

Article in Agravery Press