Highlights from CEO Rostec press-briefing

Sergey Abramov, Industrial director of Rostec weapons cluster, commenting on the cluster strategy adopted in the beginning of April 2017, states that the cluster will be expanded due to the joining of Uralvagonzavod, the military division of the Tractor plants concern, about 20 state gunpowder enterprises, and about 50 JSC Spetsremont enterprises.

The measures necessary for the transfer of Uralvagonzavod to Rostec must be implemented within 18 months.

“Our task after we obtain control over the plant is to set up coordination between the UVZ military segment and other holdings and entities which control the cluster directly to improve  the effectiveness of the production process and to increase the competitiveness of the products,” comments Sergey Abramov.

According to Abramov, Rostec awaits the transfer of the military division of the Tractor plants concern (TPC). VEB will get the TPC military division for the unpaid debts of the concern’s owners to the bank. Thus far, an agreement has been achieved that VEB will transfer the military segment under Rostec’s control for a yet undetermined period. Eventually, these plans might become part of Rostec’s structure.

Besides, Rostec is planning for the state gunpowder enterprises (it is about 20 enterprises) and the JSC Spetsremont enterprises to join the cluster.

The enterprises transferred are the key ones in the ammunition industry. Due to this, as well as to the need to solve the problems of long-term scenario planning of the industry, set up cooperation, and increase organizational effectiveness, the creation of a centre for information and analysis on the industry in the cluster is planned. Many of these assets are bad; therefore, a comprehensive development and financial health program will be necessary.

According to Abramov, the cluster’s holdings and entities are currently still on the stage of formation and optimization, therefore, it is possible to transfer new assets to them, to allocate assets to the direct management of the Corporation, or to transfer assets within the cluster.

We would like to remind that on April 5, 2017, the Board of the Rostec State Corporation adopted the weapons cluster strategy that includes the development of the key Russian military enterprises. The main target is the growth of the profit of the holdings and enterprises of the cluster with the average annual increment by 12.1% (from 2015 to 2025 without new assets transferred into the cluster). In terms of entering the smart markets, the cluster aims at aggressive growth of civilian products and the increase of export. If the strategy is realized successfully, the cluster’s revenue will, in monetary terms, be around 700 billion rubles, and net profit will be more than 50 billion rubles.

 

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