Wednesday November 28, 12:25 pm Eastern Time
Russia's Rosoboronexport: Growth Prospects
MOSCOW, Nov. 28 /PRNewswire/ — On Monday, Russia's leading business daily Vedomosti published an interview with Andrey Beliyaninov, chief executive of Russia's state arms exporter Rosoboronexport as the company has just celebrated its one-year anniversary.
Rosoboronexport was established on November 4, 2000, when Russian President Vladimir Putin decreed the consolidation of state exporters Rosvooruzheniye and Promexport to avoid unnecessary competition.
Prefacing the interview, the paper said that ``the intermediaries' merger marked the beginning of their transformation.''
As Beliyaninov said, ``Rosoboronexport's principal goal is to become an investment agency for Russia's military industry and a stakeholder in the military industrial holdings underway now, rather than being a mere arms sales intermediary.''
Summing up the annual results he said that ``the company's first phase, formation, is obviously over, with the company having a detailed balance sheet, a revenue plan and well-planned spending. Now that we have seen where to grow, we have developed a four-year strategic plan,'' he said.
Beliyaninov confirmed that in the second phase Rosoboronexport will be acquiring stakes in military equipment manufacturers to become a ``well-balanced company.''
``An intermediary lacking a production base is subject to various market ups and downs. Its survival chances can be pretty bad,'' he said.
Beliyaninov said Rosoboronexport is very interested in a single state policy towards the military industry's assets held with commercial banks. In particular, the company expressed concern over a 25% stake in the Sukhoi design bureau, 14% in the Ulan-Ude aviation plant and 25% in the Baltic shipyard owned by the now-defunct Inkombank, he said. ``We do not plan to expand globally, but we do care who handles military industry assets''.
Pursuing a strategy of production-cum-sales, Rosoboronexport is expected to participate in state export-oriented military manufacturers' holdings, which are in the pipeline now, Belyaninov said. He said Rosoboronexport's participation in this process is ``very important for the company.''
Commenting on President Putin's decree setting up the Sukhoi Aviation Holding Company, Beliyaninov said that new arms holdings, including Sukhoi will not be allowed to independently market their weapons.
``The state must control the supplies of finished products, while the Sukhoi Holding, for instance, could be furnished with the right to provide after-sales servicing and supply parts. It is a state intermediary's job to supply end-products,'' Beliyaninov pointed out.
He added that customers ``need to be provided with comprehensive service, as one product or service often requires another, for example, army equipment often needs airforce support, while air devices may require navy infrastructure.''
``To achieve such comprehensive coordination is a very challenging task and we are doing our best to ensure stable development of the industry. We do not need revolutions now,'' Beliyaninov said.
``After all, the state is interested in the inflow of foreign cash into Russia to lift domestic industrial output, and by developing our large military industry, which is very much export oriented, we will improve the living standards of many Russian regions.''
Beliyaninov also said that Rosoboronexport's revenues have totaled U.S. $3.6 billion so far this year and the company is stepping up its investment in the industry.
``You need money to raise output and we increase advance payments to the industry,'' he said. There is a problem, however, with letters of credit. ``Many letters of credit negotiated abroad simply do not work and our goal is to move such transactions to Russia, to those domestic banks enjoying international acclaim''.
Beliyaninov also denied allegations that Russia lacks resources to invest in the military industry. ``There is enough free cash flow in the country to invest in the sector, but the point is that only coordinated and planned investment could result in economic growth,'' he said.
The Russian government will soon pass a national armament upgrade program, allocating funds out of the federal budget and involving regional funds, as well, he noted.
Additionally, Russia's Industry, Science and Technology Ministry has earmarked resources to finance a priority R&D program, with an option of drawing loans from banks exposed to excessive liquidity risks, he said. In conclusion, Beliyaninov said there is also a foreign investment option to finance the industry's development projects. ``The banks we are currently cooperating with, such as Vnesheconombank and Vneshtorgbank, are respectable enough to tap international capital markets for relatively inexpensive loans for our programs,'' he said.
If you have further questions, please contact Rosoboronexport Press- Service at (7095)-201-99-15.