It’s in the hands of… Rostec: will Tatarstan transfer its ‘defense’ shares to Nikolay Kolesov?
Tatarstan is going to privatize its shares in the Kazan Electrotechnical Plant and in Almetyevsk Radiopribor
This year the Tatarstan government, apparently, may privatize the last 'cream' of the Tatarstan defense. As it became known to Realnoe Vremya, the Republic may say goodbye to 42.06% of shares of Kazan Electrrotechnical Factory JSC and to 41.06% of shares of Almetyevsk plant Radiopribor JSC in exchange for the investment programmes. The receiver is called to be the entities of Nikolay Kolesov. If that happens, the head of the concern KRET (Concern Radio-Electronic Technologies) will consolidate all Tatarstan enterprises of EW and IFF systems, which became extremely profitable on the wave of the rising defense procurement.
Golden IFF System and EW
Realnoe Vremya found out about the upcoming deal on privatization of state shares of the last defense factories from a high-ranking source close to the government. We are talking about the state shares of Kazan Electrotechnical Factory PJSC, which is one of the leading manufacturers of the means of IFF in Russia, and Almetyevsk plant Radiopribor JSC, specializing in the production of means of electronic warfare (EW). The interest in them has increased due to the explosive growth of the state defense order, by implementing which the defense plants are increasing revenue at a frantic pace. The first one is engaged in the release of means of national identification for helicopters, the second one — in the production of means of electronic warfare (EW) for aviation units of the family Sukhoi and Tupolev.
As the interlocutor told Realnoe Vremya, as a strategic investor of the two plants it was chosen the entities of Nikolay Kolesov, but he did not specify whether he was talking about his private interests or the state concern Concern Radio-Electronic Technologies (KRET), which is the main executor of the state defense order for the production of electronic warfare equipment and avionics for combat aircrafts. This year the state holding has received the state defense order at the amount of more than 101 billion rubles, reported the press service of KRET. 'In 2016, it is planned to increase the supply of land, air and naval electronic warfare systems, radars and promising means of state radar identification,' the report said.
The package of shares in exchange for state investments
'The decision on the transfer of state shares of these factories to the entities of Kolesov was made 1.5-2 years ago, and now it has started the stage of practical implementation,' said the source close to one of the Republican ministries. 'In this case, the position of the Republic is simple: if the development of the Republic [the enterprise] is not invested, then there will be no interest to pursue [to own]. Now the new owner will come there: Nikolay Kolesov with a new investment programme.' How the transaction will be conducted has not been fully determined. The interlocutor also did not say who will be the owner of the packages: the private company or Kolesov or KRET. At the same time, with high probability, it will the transfer of state-owned shares in exchange for investment programmes of the state corporation.
Concern Radio-Electronic Technologies (KRET) JSC is a part of the State Corporation Rostec and combines 97 companies engaged in developing and manufacturing of radio-electronic products for military and civil purposes. The Concern develops avionics for the leading Russian aircraft models, including for SU-35S, Ka-52 Alligator, Mi-171A2, Yak-130, Il-476, etc. Thus, KRET is the largest Russian supplier of aircraft manufacturers — the United Aircraft Corporation and the Russian Helicopters. Today, KRET occupies about 40% of the market of avionics for military aviation and about 60% in the segment of military and transport helicopters. According to the First Deputy Director General of Concern Igor Nasenkov, KRET is participating in the state armament programme until 2020 and the federal target program 'The Development of defense-industrial complex of the Russian Federation until 2020', so the priority remains 'the unconditional fulfillment of the state defense order'. 'The programme of production of electronic warfare equipment and avionics for combat aviation is very tense,' he says. 'We are faced with a shortage of high-performance workplaces. Accordingly, our efforts for overcoming this challenge lie in the advanced implementation of projects of modernization of industrial base of enterprises — the participants of the state defense order.' It only remains to add that next year the enterprises of EW and IFF systems must equip a record number of military aircrafts. As the commander-in-chief of VKS Colonel General Viktor Bondarev has reported recently, in 2017, Russian Aerospace Forces expect to receive more than 100 units of new aircrafts and helicopters. Already now the companies of EW switched to two-shift operation. Thus, the entities of Kolesov take under the wing the prosperous defense plants.
The profit centre of the Kazan defence industry in the Research institute
Anyway, the Almetyevsk plant Radiopribor has long ceased to be an independent enterprise since it transferred powers of the sole executive body of 'Scientific-production Association Radioelektronika named after V. I. Shimko JSC (82% owned by KRET). It is the main profit center, and plant exists as the production site. It can clearly be seen from the financial performance of companies. You can compare it by yourself, the net profit of Scientific-Production Association Radioelektronika named after V. I. Shimko JSC in 2015 amounted to 653 million rubles, of the plant — a little more than 4 million rubles. Besides, under the management of Scientific-Production Association Radioelektronika named after V. I. Shimko JSC there is the Kazan plant Radiopribor, the net profit of which was more — 27.7 million rubles, but it is still inferior to the scale of the management company.
On the threshold of privatization the controlling shareholders of the Almetyevsk Radiopribor completely blocked the payment of dividends, and at the Kazan plant they reduced its payments from 30% to 25% of the total net profit. Meanwhile, the management company is obliged to pay its shareholders — KRET (82%) and Rostec (14.99%) — generous dividends at 278 million rubles (43% of net profit).
The share in the Kazan Radiopribor has already been blurred
The quickening of privatization, perhaps, is due to the inclusion of these plants in the federal target programme of the Ministry of Industry and Trade at 20 billion rubles, which will be the source of implementation of investment programmes at the Kazan factories… 'The main funds allocated by the Ministry of Industry and Trade in the framework of the programme will go to re-equipping of the production plants,' said the head of KRET Nikolay Kolesov in an interview with the corporate periodical 'Radio-Electronic Technology'. The Kazan plant Radiopribor also claims to get into the industry federal target programme. In March of this year, the Board of Directors of Radiopribor JSC approved the additional share issue on the increase of the authorized capital up to 224.9 million rubles. As a result, Rostec will increase its share from 12.25 to 30%, its 100% subsidiary of KRET will reduce the participation from 43.8% to 35%. Thus, RT government share will be reduced to 35%, since RT is not going to participate in the redemption of shares. Thus, under the control of Rostec there will be 65% of shares of Radiopribor.
The experts ambiguously regard the upcoming entry of KRET in the capital of the Kazan Electrotechnical Plant, 58% shares of which, according to rumors, supposedly are in private ownership of the entities of Nikolay Kolesov. 'The state participation in the capital of the Kazan Electrotechnical Plant contributed to the quick making of the decision on the placement of the GOZ, because 'the state money' was received by the state plant. And no one from the Accounts Chamber raises questions about the legality,' says one of the interlocutors of Realnoe Vremya. 'And with the appearance of KRET as the owner may open a conflict of interest between KRET and private interests of Nikolay Kolesov,' he fears.
KRET did not give any comment at the moment of publication.