Industrial holding company takes stake (446 words)

Published: 4/23/2001

Despite the speculation that Boeing, Siberian Aluminium or the increasingly aggressive Kaskol would take a holding in Ulyanovsk based Aviastar. It appears that the investor is Moscow-based holding Novoye Sodruzhestvo (NS/New Community) with a 26% holding (other reports have suggested 25%) in the plant through the issue of stock, according to Konstantin Babkin a board member of Novoye Sodruzhestvo. The news that Novoye Sodruzhestvo had acquired the blocking stake was announced after the meeting of Aviastar-SP 's five shareholders on the 20th of April, and appears that the buying may not yet be over. With Babkin quoted in Moscow daily Kommersant, as saying that the company intended to increase its stake further. According to Babkin, the holding company, which owns Russia's largest combine harvester producers OAO Rostselmash and Selmash Uryupinsk, as well as paint and varnish producer Empils, had researched the market and believed that there was demand for Aviastar's Tu-204s in particular. While most commentators would accept the demand scenario for Tu-204s has improved of late, after the announcement of state backing for lease financing. The ability of the plant to deliver is questioned by some commentators. Who point out that the plans for the production of 10 aircraft in the next two years will require considerable working capital, not to mention the potential costs and practicality of moving from finishing air frames to manufacture. Demand for Ruslan's although evident is unlikely to be substantial. The new management of Aviastar -SP was due to be presented to the workforce on the 23rd of April to replace the departing General Director Gennady Korotnev and a number of his colleagues, this was however delayed until the 24th of April after the new management had attended the board meeting of the plant's major shareholder OAO Tupolev (75%) in Moscow. The new General Director, who is not an Aviastar employee, is Yury Ryazanov supported by a deputy called Valery Maltsev . Despite the aerospace strategy for the plant, it appears that it may become increasingly diversified. Recent announcements have suggested that the plant will start production of railway cars as part of joint venture with German producer Siemens and the plant has already received plans for the production of three cars in the next nine months. The reported ambitions of NS's agricultural equipment production holdings of increasing share of the world combine market form 15% to 20% may also influence the development of the plant's business with discussions of production of components for equipment already reported to be underway. Babkin in press reports however, stated that these would not be significant operations at Ulyanovsk compared with aerospace activity.

Article ID: 2507