Code Agriculture (Holdings) Limited (formerly known as China Chief Cable TV Group Limited) completed the acquisition of the entire equity interest of Kang Yuan Universal Investment Limited ("Kang Yuan Universal") in February 2010. Upon completion of the acquisition, Kang Yuan Universal has become a wholly-owned subsidiary of the Company, which in turn holds entire equity interest in Jiangsu Kedi Modern Agricultural Company Limited ("Jiangsu Kedi"), a company engaging in the business of modern tobacco agricultural machinery and tobacco-specific fertilizer and pesticide in the People's Republic of China (the "PRC").
The Group has entered into the huge market of tobacco agriculture in the PRC by this acquisition. The PRC's tobacco industry is the largest tobacco industry in the world, primarily due to the strong sales of cigarettes, loose tobacco, and cigars. In year 2007, State Tobacco Monopoly Bureau implemented the project for revised standards in tobacco industry to promote the modernization in tobacco agricultural industry. The PRC government had subsequently launched a series of policies to start the construction of modern tobacco agriculture. The subsidies for the industry have exceeded RMB 12 billion each year since year 2008. The PRC's tobacco agriculture is at the stages of constant update and rapid development.
Jiangsu Kedi is one of the largest manufacturers of tobacco flue-curing barns in the PRC and is one of authorised suppliers of tobacco flue-curing machinery in China National tobacco Corporation. In addition, Jiangsu Kedi works cohesively with State Tobacco Monopoly Bureau in developing tobacco agricultural standards and promoting modern tobacco agricultural technologies in the PRC.
As a major player in the PRC’s tobacco agricultural industry, one of Code’s business directions is to assist the continuous modernisation of the industry and to implement policies in the best interests of our shareholders, business partners, employees, and tobacco farmers in the PRC and other stakeholders. With a mature technical competence, products of quality and effective operational management team, Code has established a sustainable development foundation, and a reputable branding with high quality within the tobacco agricultural industry in the PRC. However, in view of the tough business environment in the PRC and the uncertainties over the market sentiment of intensive fluecuring barns machinery and evaluation of credit control, cost control measures and product enrichment have already been in place to enhance Code’s overall competitiveness in the tobacco industry.
With an aim to maximise shareholders’ long term return, Code will take a prudent and cautious approach to capture and evaluate possible business opportunities, and will continue to reinforce its position in the intensive fluecuring machinery, by streamlining its business model, financing, aspiring further advancement in its product quality and innovation, and enhancing the Code’s resources utilisation in an cost-effective approach.