Rustam Minnikhanov: ‘Despite difficulties in the economy, NKNK is developing and will get modern production’
The leading petrochemical enterprise of Tatarstan summarized the results of 2015 at the shareholders' meeting
On 15 April, the shareholders of Nizhnekamskneftekhim PJSC at the annual meeting presented the results of financial and economic activity of the company in 2015. As the figures of reports announced at the meeting show, the petrochemical company has achieved impressive results in both manufacturing and financial sectors again, which allowed them to obtain record revenue, to channel the impressive profit not only to the payment of dividends to the shareholders but also to allocate more than 18 billion rubles for the future strategic development. Traditionally, the event was attended by the President of Tatarstan, who praised the company as successful and said that the construction of the olefin complex, which the company is going to begin this year, is the main task for the Republic.
To make caoutchouc more
Before the meeting, the head of the Republic visited the production site of the plant for the production of isoprene-monomer (IM), where NKNK is planning to hold a large-scale reconstruction. Its purpose is to increase the production of isobutylene, the main raw material for the manufacture of butyl rubber. According to the project, the plant will consist of three blocks that will be able to produce 160,000 tonnes of raw materials per year. Thus, the total amount of raw material will increase to 333,000 tonnes, which, in its turn, will allow to increase the volumes of production of synthetic rubbers. The technology will include one-stage synthesis – the in-house development of the plant scientists of IM and the scientific-technological center of NKNK, which will help to reduce the cost for energy twofold.
Later, giving a speech at the meeting, Rustam Minnikhanov said: 'Despite the limitation of finances, difficulties in the economy, NKNK is developing and will get modern production soon. Important work is being conducted including in reducing the costs. And most importantly, it should be noted that huge work is being in the framework of import substitution: here in Nizhnekamsk, there has been created the production of catalysts where the enterprises of the Republic and KFU have been attracted. I believe that you have your scientific and technological center that allows you to be competitive and to take the leading position in our country.'
The strengthening of positions on domestic and foreign markets
Having visited the industrial site, the delegation headed by the President arrived in the Central office of NKNK, where the shareholders of the company gathered. The main issue of the meeting was the summing up the results of the past year by the joint stock company. The results were presented by the head of the company Azat Bikmurzin.
Speaking about the results, he noted that the company's management put emphasis 'on the strengthening of the positions on the global market as a manufacturer of synthetic rubbers, on the domestic – as a major supplier of plastics, the shift of sales with low added cost was correct.' As a result, the plan for the production of output has been fulfilled at 115% and the output production in comparison with the 2014 in comparable prices has exceeded 103%.
'We have developed the maximum in the entire history of the company volumes of rubbers – more than 647,000 tonnes, polystyrene – nearly 300,000 tonnes, as well as isoprene, styrene and benzene. This reporting year, the products at 72 billion rubles were exported, which is 15% more the revenue from exports in 2014. The exports share in total sales amounted to nearly 48%. Synthetic rubbers traditionally given the largest part of export revenue – 78%.'
Nizhnekamskneftekhim has retained its leadership position, taking the second place in the field of plastics production in the Russian Federation. In the domestic market, 90% of this type of product have been realized this reporting year. Plastics accounted for 58% of the total sales in the domestic market.
Then, Azat Bikmurzin briefly highlighted the achievements of each of the nine technological companies of the company and outlined the tasks facing them this year. For example, in the plant of the oligomers in the near future it is planned to launch into operation the manufacture of linear alpha-olefins, where will be produced fractions of butene-1 and hexene-1. They, according to Bikmurzin, 'will allow refusing import deliveries of these factions'.
By the way, the average wage of the enterprise workers, said the head of NKNH, also has increased by more than 15%, exceeding 44,000 rubles by the end of the year.
The Director General also paid attention to the results of the implementation of the environmental programme, stressing that 'our company has a special attitude to the environment'. The implementation of environment protection measures have helped to reduce emission to atmosphere by 1,000 tonnes in comparison with the previous year, the withdrawal of fresh water from Kama river for the needs of enterprises has fallen by 1.7 million cubic metres, the wastewater discharge after the buffer ponds at Strelochny Log stream has been reduced by 3.4 million cubic meters. These days, the enterprise is conducting a large-scale reconstruction of biological treatment facilities, the aim of which is to improve the environment in Nizhnekamsk significantly.
Azat Bikmurzin announced significant for shareholders data concerning shares:
'The company's shares are included in the first (highest) quotation list MICEX, as well as in the index of shares of companies in the chemical and petrochemical industry of MICEX. From December of 2015, the ordinary shares of Nizhnekamskneftekhim are included in the MICEX Index and RTS Index.'
The revenue – in business
After the Director General of NKNH, Ilfar Yakhin, the chief accountant of the company, announced the results of the annual financial statements. According to presented data, the annual revenue was 150.5 billion rubles, own capital by the end of the year — 91.4 billion rubles, NKNK allocated 16.1 billion rubles to the budgets of all levels.
The representative of the auditing company PricewaterhouseCoopers and the chairperson of the audit Committee gave their assessments of the accuracy of these indicators. According to them, the financial statement 'reflects authentically in all material respects the financial position of the Company'.
After that, the shareholders were proposed to vote for the distribution of net profit, 30% of which they decided by the total voting power to channel on payment of dividends, or 4.34 rubles on each ordinary and preferred share, and the remained 18.4 billion rubles to invest in the future strategic development of the company.
New faces in the Board of Directors
It was the turn of election of the Board of Directors of Nizhnekamskneftekhim for the current year. The membership was undergone drastic changes. The shareholders of the company were proposed a list of candidates, which did not include Jelko Milich – the Executive Director of IPCO – TRADING S. A., Ravil Zaripov, who previously headed the Ministry of Industry and Trade of the Republic, and now is the assistant to the President on aircraft construction, as well as Aleksander Rappoport, the managing partner of the law firm Rappoport and Partners.
Instead, they were proposed to elect the adviser to the Director General of Tatneft – the head of Department of strategic planning of Nurislam Syubaeva, a shareholder of Inpetrol SA Muyichich Naim and Albert Latypov – the head of legal department of TAIF JSC.
On the basis of the special right ('golden share') by the state representative in the Board of Directors of NKNK was appointed Rinat Sabirov again, aide to Tatarstan President.
Those who were not included in the new Board of Directors, its chairperson Vladimir Busygin and Director General of TAIF Albert Shigabutdinov presented gifts and expressed gratitude for the many years of work.
The contribution to the preparation for Nizhnekamsk anniversary
The mayor of Nizhnekamsk Aidar Metshin several times emphasized in his speech the significance of NKNH for the development of the city and rayon. He noted that due to the effective work of industrial enterprises, including Nizhnekamskneftekhim, Nizhnekamsk municipal rayon takes the leading position in many aspects and has retained the third place in the ranking of socio-economic development of municipal formations of Tatarstan. Also, due to the active development of new and modernization of existing facilities Nizhnekamsk took 2nd place in the Republic for attraction of investments into the fixed capital.
Metshin also highlighted the company's contribution to the preparations for the 50th anniversary of the city: 'Historically being a socially oriented enterprise, Nizhnekamskneftekhim participates actively in the improvement of the coastal zone of Krasny Klyuch and in the solution of such important matter for all the residents as the maintenance of roads'.
NKNK as a point of growth for Innokam
While there was the counting of votes, the President Rustam Minnikhanov came to the tribune. In his speech he thanked NKNK for the contribution to the economy of the Republic, the staff — for their professionalism, calling the year-end exemplary and the enterprise — successful, and the contribution of the petrochemical industry in the Tatarstan economy — huge.
'Amid all economic difficulties, difficulties on the market Nizhnekamskneftekhim has not only maintained its position but also increased the volume indices, the indices of profit, salaries, work on environmental programmes. For all planned programmes, the company not only has achieved its objectives but also exceeded them.'
Minnikhanov said that the main task for the company and RT is the project for the construction of the olefin complex, the first stage of which will be the production of ethylene with capacity of 600 thousand tonnes per year, because NKNK is a 'the point of growth in the Kama cluster for petrochemistry and oil refining'. He noted that the company solves its problem in the framework of the programme of increasing production of rubbers, but for the development of the plastics ethyleneis needed. 'The construction of ethylene complex is the priority programme of the Kama cluster,' said the President. Besides, as Rustam Minnikhanov noted, the development of this cluster will require major infrastructure changes, so work is being conducted to attract federal support for these purposes.
The President of Tatarstan once again thanked the leaders of TAIF, Nizhnekamskneftekhim and its staff, called them 'the leaders not only in Tatarstan, but also in the country and, of course, you are known all over the world, you are the largest producer, a major exporter'.
'From myself and on behalf of the leadership of the Republic, I would like to thank you for your results, for your work and I wish Nizhnekamskneftekhim will develop further. If the enterprise prospers, therefore, the Republic will also thrive together!' with these words Rustam Minnikhanov concluded his speech.
The time came to announce the voting results. According to the counting of the committee, the majority of shareholders voted in favor of changes in the Board of Directors, for distribution of profits, PWC as the auditor for 2016, as well as minor changes in the Charter of the company. The closure date of register of persons entitled to receive dividends was determined on 4 May of this year.
Also, in the presence of shareholders, the new-elected Board of Directors on the proposal of the President of Tatarstan again unanimously elected Vladimir Busygin as its chairperson and confirmed the powers of Azat Bikmurzin as Director General of Nizhnekamskneftekhim PJSC.
'It is important that these two large holdings would balance and complement each other'
After the shareholders' meeting, the President Rustam Minnikhanov, the management of NKNH and TAIF traditionally answered the journalists' questions.
The first question referred to the main strategic project of NKNK – the olefin complex: when the scheme of financing will be defined and the construction and equipment delivery will start. The head of TAIF Albert Shigabutdinov took the floor. As he noted, 'the financing scheme will be determined in late September and early October, we will enter the site by the end of the year, and the equipment will start to be delivered at the beginning of the next year. The completion date of the project — the end of 2018 – the beginning of 2019'.
The journalists enquired about the fate of 25% shares of NKNK purchased by Tatneft in the spring of this year from the state represented by Svyazinvestneftehim, on what Rustam Minnikhanov replied:
'We have already expressed our opinion on this subject that the petrochemical unit of Tatneft is also developing. But, in any case, today Tatneft is a strategic partner of the group of companies TAIF. And all will develop depending on the requirements and interests of the parties. It is important that these two large holdings would balance and complement each other. We've already announced this, and I can't tell you more than what we have told about, some secrets. For now, this is the scheme of work.'
The President was immediately asked how Tatneft's freezing of the oil production level will affect if such decision will be made on 17 April. According to Rustam Minnikhanov, if the decision is made, 'we will strictly fulfill the commitments of the Russian side. There are calculations that the company will function normally at those volume indicators which has today'.
The next question concerned the development of infrastructure of the 47 th and the 49th microrayons, where the workers of Nizhnekamsk enterprises of group of companies TAIF will get the apartments, and was addressed to Albert Shigabutdinov. As he said, the mayor has already have proposals for the development of infrastructure, they are being studied. It is social issues such as school, kindergartens, shopping center – they definitely will be resolved.
In his turn, Rustam Minnikhanov offered to enter the federal programmes and obtain their support in order to solve these problems.
'Here, a world-level shopping and entertainment center is needed, so that people come here instead of going somewhere else. Look what the level of income in this city is. We definitely need to attract a large global company. The transport accessibility is also needed, and road and transport network needs to be adapted for today's challenges. The idea to make a bridge through Sokolki is very good, Nizhnekamsk will be closer to the capital by 40-50 km. Also, the road will be much safer,' concluded Rustam Minnikhanov.
