COMMERCIAL NEWS UPDATE FROM LOWER VOLGA VALLEY

February 2006

 

Submitted by Marina Johnson, BISNIS Representative in Samara, Russia

This report summarizes commercial and business development news in the South of Russia and the Lower Volga regions for February 2006.

 

This report contains the following information:

 

LOWER VOLGA VALLEY

 

-         Samara Region: Automotive and Aerospace, Industrial Production 

-         Ulyanovsk Region: Automotive and Airspace, Industrial Production

 

SOUTH OF RUSSIA

 

-         Volgograd and Astrakhan Regions

-         Rostov region

-         Krasnodar region

-         Stavropol region

 

Samara Region

Automotive and Airspace

AvtoVAZ announces plans till 2020

AvtoVAZ announced plans to launch at least three principally new models in the next 5 years, all front geared and 4x4. Total production output is to exceed 1mln cars per year. To guarantee fulfillment of all plans the plant will construct a new assembling line with annual capacity of 450 000cars.

Source: www.volgainform.ru

Lada Kalina production grows

In 2005 LADA KALINA assembling reached the planned capacity of 60 000cars a year. The plans for 2006 are to reach the projected capacity of 220 000cars a year. Currently personnel training is underway to increase the number of workers to the necessary 2 000 people.

Source: www.volgainform.ru

AvtoVAZ sums up January production

In January 2006 JSC AvtoVAZ manufactured 49 181cars, which is 2.2% above the same period of 2005. Export production reached 5 000cars, LADA 110 production was 13 292 cars and Lada Kalina cars – 4 012cars. Sales of January amounted to 43 000cars, being 3.2% higher the same period of 2005.

Source: www.volgainform.ru

AvtoVAZ employs Standard Euro-4

On February 6 JSC AvtoVAZ started production of LADA110, LADA 4x4 and LADA KALINA in conformity with the environment control standard Euro-4. The measure is aimed at increasing export to countries with Euro-4 standard requirement.  The technological changes necessary are slight as the measure was planned before. In February testing lots are to be assembled.

Source: www.volgainform.ru

GM-AvtoVAZ defines plans for 2006

General Motors defended its production partnership with AvtoVAZ on Tuesday, but said its growth in Russia this year would stem from sales of its own models. The U.S. car giant said it would open 34 new dealerships by the end of the year in an effort to increase sales in Russia by 30 percent, to around 100,000 vehicles, and increase its market share. It declined to say how much it would invest.

In the same period, production of models by the GM-AvtoVAZ joint venture in Tolyatti are due to fall by 9 percent, to 47,000 vehicles.

In terms of its own plans, General Motors wants to reestablish its Chevrolet brand as the best-selling foreign model in Russia, said Warren Browne, GM's director for Russia.

Source: www.themoscowtimes.com

GM-AvtoVAZ Halts Production

Output at General Motors' joint venture in Russia has been halted. Russian newspapers said AvtoVAZ had stopped delivering parts to the venture's plant in Togliatti, but the GM spokesman declined to go into the reasons for the stoppage.

AvtoVAZ announced this month that it would build a new state-funded car plant and might close the joint venture with GM. The strategy shift comes as Russia seeks to create an auto industry champion to meet the challenge of foreign rivals, whose sales of imported and locally assembled cars are booming.

Vedomosti, quoting a source close to AvtoVAZ management, said AvtoVAZ was losing money by supplying car kits to the venture at 15 percent below cost. That amounted to losing $20 million per year, given an annual output of 50,000 cars.

The Tolyatti plant, in the Samara region, builds 50,000 Chevrolet Niva sport utility vehicles and Viva sedans per year. AvtoVAZ and GM each own 41.5 percent of the venture, while the European Bank for Reconstruction and Development owns the remaining 17 percent. GM has used the venture to fuel sales growth and win market share in Russia since 2002, as sales stagnate or decline in Europe and the U.S.

Sales in Russia of the Chevy Niva and Viva models fell by 14 percent last year to 46,000, industry figures show.

Source: www.themoscowtimes.com

GM-AvtoVAZ Set to Restart Production

GM-AvtoVAZ is set to restart production Tuesday following a shutdown that lasted more than a week after the company's main shareholders reached an agreement at an emergency meeting on Monday. In the dispute, AvtoVAZ had argued it was losing money on the supply price. A spokesman for GM Europe said Monday that the venture was paying the market rate for parts.

The GM-AvtoVAZ venture and its parent companies declined to disclose what terms had been agreed on, saying only that the companies remained in negotiations. The deal allowing GM-AvtoVAZ to restart production comes as speculation mounts over a government plan to pump $5 billion into the country's automotive industry.

A spokesman for the Industry and Energy Ministry, of which Alyoshin's agency is a part, said late Monday that the ministry had yet to sign off on the plan. Finance Ministry spokesman Vitaly Krasnyuk said his ministry could not agree to the plan, as it was seeking to give AvtoVAZ tax-exempt status.

Source: www.themoscowtimes.com

GM-AvtoVAZ JV sums up

Since September 23, 2002, when the first Chevrolet Niva car of GM-AvtoVAZ joint venture was produced, the enterprise has manufactured and sold 131 465 cars. In September 2004 the joint venture launched production of a new front geared model Chevrolet Viva of Class C, based on Opel Astra T-3000. The production was halted for two weeks in February due to management discord.

Source: www.volgainform.ru

AvtoVAZ to get new suppliers

“Krista”, a car parts and accessories producer, (Syzran) and AvtoVAZ have signed a contract for steering wheels supplies and mull car seats supplies. The enterprise is ready to provide the car maker with 60 000car seats a year. Later “Krista” will start production at a workshop of AvtoVAZ, which will raise the output to 120 000 car seats by 2007. So far the only provider of car seats has been “AvtoVAZagregat”, which is presently investing into developing seats for Kalina and Priora models.

“Krista” has also started plastic coloring works at AvtoVAZ? Which should reach the capacity of 240 000 plastic sets a year.

“Krista” has its own textile production with annual capacity of 150 000sq m and plans to launch seat carcass and filling production as well.

Source: www.vedomosti.ru

Samara Airlines to lease TU-154 to Iran

 

JSC “Samara Airlines” plans to lease two TU-154 to an Iranian airlines company. “Samara Airlines” face a discrepancy between the existing air fleet and transportation load. Presently TU-154 are too capacious for Samara and need to be replaced by An-148 and Boeing-737-300.

 

Source: www.regions.ru

 

Samara Airport to modernize equipment

 

JSC “International Airport Kurumoch” has reached an agreement for cooperation with several leasing companies in the framework of modernization and development program. The cooperation is aimed first of all at leasing supplies of equipment and special devises. The modernization program is meant for 3-5 years and will involve re-equipment of all necessary services.

 

Source: www.regions.ru

Samara Government Buys Tu-154

Samara Oblast Government is to purchase 2 TU-154 from JSC “Aviakor-Aviation Plant”. The planes will be used for official flights of the government members and the local football team. The estimated cost of the deal is $11.42mln. Both planes will be transferred to “Samara Airlines” under the monthly rate of $71 000.

Source: www.samara.ru

Industrial Production

Volgotanker Says State Takeover Is Inevitable

Volgotanker, former shipper of embattled oil major Yukos, made a plea to the government Tuesday to be taken under state control, saying the nationalization of the shipper was inevitable. "At this point, the only possible option for us is to come under government control in order to save 10,000 jobs," Vladimir Zhukov, chairman of Volgotanker's board of directors, said. The tax claims, put forth by Samara regional tax authorities for 2001 through 2004, exceed the shipper's net assets, Volgotanker said. The Samara regional prosecutor has also frozen Volgotanker's property, including its fleet -- Russia's largest fleet of river tankers and barges.

Volgotanker is 76 percent owned by a number of offshore companies believed to be linked to the shipper's management, and minority shareholders own about 4 percent. The state last year announced plans to sell its 20 percent stake in the shipper.

Kleimyonov said Volgotanker did not have the $50 million it needed to maintain and renew its fleet, whose shipment volume is set to drop 30 percent this year, to 4 million tons. The railways would be able to pick up the slack from waning river shipments, but the majority of Russia's exports, which amounted to 251 million tons of crude and 100 million tons of refined products last year, are routed through Transneft pipelines.

Volgotanker operates in 17 regions in Russia and delivers shipments to 144 sea and river ports in Western Europe, the Middle East and North Africa. Yukos was Volgotanker's major client until 2004, using river shipments to bypass the country's clogged pipelines operated by state monopoly Transneft. Yukos was also one of the main Volgotanker owners until 2000, when the oil company sold its stake in the shipper. Volgotanker had contracts with state-run Rosneft, Tatneft, TNK-BP, Turkmenneft, Bashneft and other oil companies last year. The shipper has yet to sign any 2006 deals, which are normally sealed in spring, Kleimyonov said.

Source: www.themoscowtimes.com

Zhiguly Construction Materials raised production 7%

In 2005 “Zhuguly Construction Materials Plant” produced 888 000tons of cement, which is 7% above 2004. Chalk production output was 2 700tons and macadam production output reached 765 000tons. The capacity of the plant is 1.9mln tons a year.

Source: www.volgainform.ru

KuibyshevAzot sums up 2005

In 2005 the sales of JSC “KuibysheAzot” (mineral fertilizers producer) soared 34.4% against the year before, revenue being 8% higher (total $76.4mln). Production growth reached 9.1%, the product which reached the highest output were: mineral fertilizers (4.9% up against 2004), ammonium nitrate (12.5% increase against 2004), polyamid-6 (31.9% growth verse 2004). The high results root in technical modernization, which received $51mln of investments, and in the fact that polyamid-6 production was increased up to the project capacity.

Export of 2005 amounted to $360.1mln (26% up verse 2004) and domestic sales of 2005 totaled $117mln (27% increase against 2004).

Source: www.volgainform.ru

 

Ulyanovsk Region

 

Automotive and Airspace

 

UAZ fires 15% staff

 

JSC UAZ announced that 15% of the present personnel are to be made redundant due to low sales and perspectives. The plant intends to slowly change production to UAZ-Patriot, older models to be halted.

 

Presently the plant produces 15% of all Russian off-roaders. In 2005 68 000cars were manufactured.

 

Source: http://news.samaratoday.ru/

Japanese automakers visit Ulyanovsk

On February 1 representatives of the largest Japanese car maker KANEMATSU Co. visited Ulyanovsk Regional Union of Entrepreneurs and the holding “AMS-Group” to discuss probable cooperation and supplies of engineering equipment to Russia. The parties agreed upon holding a conference of small and average size businesses in Ulyanovsk.

Source: www.volgainform.ru

Industrial Production

Ulyanovsk production grows

For the first time in three years Ulyanovsk region economy starts to steadily grow. Production output reached $2.472bn (106.8% against 2004). 76.3% of all enterprises in the region belong to processing industries. Metallurgy was the most rapidly developing field with 276% advance, mineral resources excavation was the 2nd with 128.2% increase.

Source: www.volgainform.ru

 

Ulyanovsk to better investment climate

 

As the framework of Ulyanovsk administration Investment Facilitation Program for 2006, investment volume should reach $714mln (against $428mln in 2005). To promote the region and attract new investors, Ulyanovsk held a series of potential presentations on national and international levels, and an investment forum in the region. A business catalogue of regional enterprises was issued and a registrar of available industrial sites was started.

 

Source: www.regions.ru

Ulyanovsk sums up 2005 construction

In 2005 Ulyanovsk region construction grew 1.8 times to 288 000sq m of dwelling, including 117 600sq m by individual citizens (44.8% above the volume of 2004). Construction output equaled $166mln (104% of the output of 2004). Thus, the region’s negative trend to remain among the lowest in dwelling construction in the Volga District was overcome.

Source: www.volgainform.ru

Ulyanovsk Cement Plant to be modernized

Ulyanovsk Cement Plant is to realize a large scale modernization including investing $4.1mln in re-equipment and $3.92 in environment protection technologies. Launching of a stepping excavator ES-11/70, which took 6 months, became the first stage of the program. Nest the plant intends to provide its sites with 7 Byelorussian dump-trucks. Ulyanovsk Cement Plant is a part of “Eurocement Group”, uniting 15 enterprises.

Source: www.volgainform.ru

 

Volgograd Region

Volgograd retailer moves to Rostov

“Tamerlan”, the largest franchisee of “Pyatyorochka”, announced plans to expand to Rostov and constructing up to 100 stores of economy class, including some 20 in 2006. The chain operator intends to create the infrastructure with training and logistics centers. The general investment volume is some $30mln. The future brand is not decided upon, as “Pyatyorochka” is asking $1mln for it.

Source: www.volgainform.ru

Volgograd ups sales of agricultural equipment

In 2005 “Volgograd Tractor Plant” (“VTP”), the Volgograd branch of JSC “Agromashholding” sold 2 479items of agricultural equipment. Leasing schemes accounted for 8% of the sales, direct commercial sales grew by 25.7%. The plant has also increased production of a modernized model by 52%. Export sales of “VTP” grew 1.5 times up to 879 items. Spare parts sales had 6% advance up to $8mln against 2004. In 2005 “VTP” cooperated with 31 dealers, including 24 in Russia and 7 in CIS, and took part in 16 regional trade shows.

 

Source: www.volgainform.ru

Volgograd and Astrakhan to construct barges for Switzerland

Volgograd Shipbuilding Plant (a part of GC “Sea and Oil Projects”) has started production of a barge P-248 for the Asian division of “Panalpina” – “Panalpina Central Asia Ec, Bahrain. The contract signed in October 2005 presupposes construction of 2 barges, construction of the second was started at Astrakhan Shipbuilding Plant “Lotos” (also a part of GC “Sea and Oil projects”).

The barge with horizontal cargo processing is meant for transferring of heavy cargo (up to 2 760tons) and can be employed in the Caspian, Baltic and North Seas, rivers and shallow waters, as well as support off-shore drilling platforms. The barges will be used by Agip KCO, an operator developing Kashagansky site in Kazakhstan. 

Source: www.volgainform.ru

 

Astrakhan Region

Koppern to launch engineering in Astrakhan

In February Astrakhan was visited by representatives of “Koppern”, a wood processing equipment seller (Germany). The visitation was aimed at selecting Astrakhan as location for an engineering plant with 100% German capital. Previously the company’s representatives evaluated political and economic situation in the region and now are choosing a site for the plant. Among the enterprises observed as prospective grounds are “Vetroenergomash” and “Antikormash”. The German party chooses the region as convenient for supplies to Europe and Asia.

Source: www.volgainform.ru, www.regions.ru

Astrakhan to construct entertaining center

Late February 2006 in Astrakhan, a fitness and entertaining center construction is to be launched. The investor of the project is Glekel Holzbau (Germany) and the investment volume is estimated to reach $37mln euros. The center is to comprise a stadium, a concert hall and an aqua park. Later the contractor may also construct a hotel nearby.

Source: www.volgainform.ru

 

Astrakhan raises industrial production

In 2005 Industrial production output in Astrakhan grew by 3.5% against 2004, the regional statistics committee reported.

Source: www.interfax.ru

 

Krasnodar Region

 

Wimm-Bill-Dann to construct dairy farm in Krasnodar Krai

JSC “Wimm-Bill-Dann”, the largest juice and milk producer in Russia, plans construction of a dairy farm in Krasnodar Krai. The farm is to have 2 400 cows, the CEO of “Wimm-Bill-Dann” southern division, Pavel Prokhorenko said.

Over the past 7 years “Wimm-Bill-Dann” has invested $12mln in reconstruction and mounting equipment at 86 farms and $86mln in reconstruction of the dairy combine in Timashevsk.

Source: www.interfax.ru, http://economy.kuban.info

Krasnodar holds Tourism Show

Krasnodar Expo hosted the South Tourism Show “Profitable Hospitality”. Over 400 enterprises of resort, recreation, hospitality, restaurant and entertaining sectors took part in the show. The show had two subdivisions: “Southern Russia Resorts”, presenting every resort area of Russian South and “Profitable Hospitality”, presenting restaurant, trade, entertaining and hotel running technologies and equipment.

Source: www.volgainform.ru

 

Rostov Region

 

Agricultural equipment show starts in Rostov

On February 9 a permanent show of tractors and other agricultural equipment and inventions from all over the world was opened in Rostov-on-Don.

Source: www.interfax.ru

 

Rostov launches truck plant

“Rostov Truck Plant”, Ltd is to start production in August, 2006, the management of the plant announced. The construction of the plant was started in 2005.

Source: www.interfax.ru

 

Russian-Turkish JV starts equipment production in Rostov

“Ekstek-Nord”, Ltd, a Russian and Turkish joint venture, started technological equipment for pressing aluminium shapes in the town of Belaya Kalitva (Rostov region), the press service of Rostov Ministry of Economy reported.

Source: www.regions.ru

Rostov expands quicklime production

The ore extracting company “Ruda” (Rostov region) finishes construction of its new terminal for quicklime production with one baking oven; three more ovens are to be added by 2007. The capacity is projected to be 160 000-170 000tons of quicklime per year. The company has already signed a frame agreement for supplies with Rostov Electrometallurgic Plant. Analysts are of opinion that the demand for quicklime is growing and the company may become the largest producer in the Southern Federal District.

Source: www.interfax.ru

 

Rostov grows GDP by 11%

In 2005 the GDP of Rostov Region grew by 10.7% up to $9.78bn against 2004, the vice-governor of Rostov region Ivan Stanislavov reported.

Source: www.interfax.ru

 

Rostov gets 27 investment awards

Rostov region received 27 awards at the 6th International Innovations and Investments Show held on February 17th in Moscow, Igor Dergilev, the chief of department of investments and innovations at the Rostov region’s Ministry of Economy, Trade and International Relations announced.  

Source: www.interfax.ru

 

Stavropol Region

 

Stavropol compiles investment projects

Stavropol region is to present over 70 investment projects at the investment program “Start”, the regional ministry of economic development and trade reported.

Source: www.interfax.ru