01 02 / key projects: Go to page. New Silk Road

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1 01 02 / 2016 Go to page key projects: New Silk Road

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3 Contents VESTNIK # The Region s Economy Results Forecasts Interview 6. Alexey Laptev First Deputy Governor of Kaluga Region: Transform risks into opportunities 35. Salavat Kutushev Director General of Kaluga International Airport: We are happy offering world-class service 37. Ruslan Smolensky Deputy Governor of Kaluga Region: Construction of the Southern Bypass Road and reconstruction of M3 are two key road construction projects 41. Vladimir Nesterenko Director General of Niarmedik Group: Niarmedik, 100% Russian-made 43. Georgy Rotov Director General of Continental Kaluga LLC: New opportunities under the new conditions Economy 10. Investments 12. Industry and Agriculture 13. Industrial Production Breakdown 14. Ratings Events 16. Events Agreements 2015 Key Projects 34. Kaluga International Airport: Development Stages and Trends 36. Reconstruction of M3 Ukraine Highway 37. Southern Bypass Road 38. New Silk Road 40. Key Goal: Get Effective Russian-Made Medicines to the Market 42. Automotive Digest 46. Business Support Afield High Potential Projects 50. Panasonic and KRAFTWAY 51. TANDETRON Charged Particles Accelerator 56. New Cluster in Kaluga Region PUBLISHED BY KALUGA NEWS AGENCY SINCE 2010 Director Larisa CHUVIKOVA +7 (910) , laraseverina@gmail.com Editor Tatiana ANTIPOVA +7 (910) , ta7096@gmail.com Advertising Elena BOCHENKOVA +7 (910) , vestnik@arrko.ru PUBLICATION OF THE MINISTRY FOR ECONOMIC DEVELOPMENT OF KALUGA REGION All rights to information and photo materials and the logo of Kaluga Region belong to the Agency for Regional Development of Kaluga Region: 41 bldg.2 Dzerzhinskogo St., Kaluga, Russia Tel.: +7 (4842) , , arrko.ru 3

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5 Editor s Word Numerous troubles the Russian economy faced in 2015 came as an efficient stress test for businessmen and government management teams. Complicated as it was with the plummeting Russian ruble and economic sanctions, new growth opportunities opened up. Today the key focus is placed on the development and support of competitive Russian manufacturers. Only products that are in highest demand, high-quality services and promising developments will remain in the market. The annual results of Kaluga region have demonstrated that the selected development strategy enables the region both to keep up its development pace and to implement new highpotential projects. In this Vestnik the leaders of the region s largest companies and the regional administration will share their views on the results of the past year and their expectations of this year. 5

6 Interview Transform Risks into Opportunities? Alexey Laptev, First Deputy Governor of Kaluga region Mr. Laptev talked to us about new developments and new openings that are expected in the regional economy this year. Mr. Laptev, according to experts the year 2015 was rather a challenge to the Russian economy. On the one hand, several foreign markets were shut off as a result of international developments forcing the Russian economy to lean on its own resources. On the other hand, dropping fuel prices and foreign shares in Russian regional manufactures pose a threat to further economic development. In your opinion, did the region s economy face more risks or opportunities in 2015? I would say that last year we managed to transform risks into opportunities and intend to carry on doing so. Shutting off of the markets is a good example. Instead of losing their markets, Kaluga region s manufacturers entered new sales and supply markets. As for foreign companies, over 100 large foreign manufacturers operate in various branches of the region s economy. Some of them have seen their domestic sales plunge, e.g. the companies of the region s automotive cluster. Obviously, a demand drop has had a large impact on the region s car plants. However, due to their high localization level the car manufacturers managed not to cross the line where shutting the plant would be more reasonable than carrying on working. With resilience they have built up, the cluster s 27 automotive component manufacturers have the time needed to adapt to the new circumstances. The plants are now researching export opportunities for their products. Volkswagen and Peugeot-Citroen- Mitsubishi are negotiating a special investment contract with the region s Ministry for Economic Development. With the contract, the companies will 6

7 Interview launch SKD assembly of new car models and export them without losing their import benefits for components. The automotive component manufacturers have already started to export their products to foreign markets, e.g. Fuyao and Continental are exporting car glass and car tires, respectively. It has become evident by now that the Kaluga region s automotive cluster has managed to survive and open new promising opportunities. However some growing markets do not have to get scared of any border closures. In our region that holds true of the pharmaceutical branch. The pharmaceutical cluster in Kaluga region is growing intensively now. Obviously, it has much lower sales than the automotive cluster, but in terms of growth the pharmaceutical cluster is ahead of all other branches. This year three large production facilities have already been launched: Novo-Nordisk, Niarmedic Plus and AstraZeneca. Total investments into those projects under the investment agreements are estimated at RUR 25.9 billion. Uniquely, the pharmaceutical cluster in Kaluga region develops both its production facilities and research centers. As you may know, Kaluga State University and the National Nuclear Research University of Moscow Institute of Engineering and Physics have significantly expanded their pharmaceutical training. A technology park is being constructed in Obninsk. The investments we are now making in this field will over 2 to 3 years yield us a competitive advantage compared with other competing regions. As regards investments, have investment activities in the region become less intensive over the past year? Where are projects standing, which have not reached their production phase yet? Are there any projects, which will not be implemented? Obviously, the region is getting less investment projects. Investors are going through a transition period when they are working on new strategies of how to distribute their money. Investors choose to invest less in some fields while in other fields a demand for investment projects is higher than their offer such as agriculture, lightweight construction materials, logistics, etc. In new investment agreements were made for a total amount of RUR 17 billion. Over RUR 23.5 billion was invested in the region s economy under the existing agreements. These investments provided for 1,800 new industrial jobs and 9 new plants. With these figures included, since 2006 a total amount of RUR billion has been invested in the region s economy under the existing agreements. 73% of the declared amounts is already driving the economic growth in Kaluga region. That means, that, firstly, our investment agreements are implemented quite efficiently and, secondly, the current economic instability has little effect on investments, which are made under the existing agreements. Kaluga region is one of the few regions with a rather diversified economy. What branches are, in your opinion, drivers of the region s economy? Industry remains at the core of our economy. Any linking of our development to oil price fluctuations is not fair. The little oil we have is brought to Kaluga region from other regions. Our industry is doing much better. The region has 2,747 industrial plants, which account for 33.8% of GRP. The industry paid RUR 34 billion to the regional consolidated budget in taxes and other non-tax revenues. What branches are the drivers of the region s economy depends on how you look at it. In terms of industrial output the leading place will be occupied by manufacture of vehicles with a share of around 35% to be followed by the food industry (15%), electric machinery and metal works. I would rather define the term driver as an industry setting the development pace such as the pharmaceutical industry and agriculture. The pharmaceutical industry is setting the standards of high-quality development. Uniquely, the pharmaceutical cluster in Kaluga region develops both its production facilities and research centers. As you may know, Kaluga State University and the National Nuclear Research University of Moscow Institute of Engineering and Physics have significantly expanded their pharmaceutical training. A technology park is being constructed in Obninsk. The investments we are now making in this field will over 2 to 3 years yield us a competitive advantage compared with other competing regions. For example, with our support OFK-Kardio has gone the whole way from a smallscale laboratory to a developer of unique substances and pharmaceutical tests. We expect to launch 2 to 3 new pharmaceuticals in the market every year. The region s agricultural manufacturers have demonstrated a significant output growth of 9%. That is a good result compared with other branches. In the past year the agricultural companies manufactured products for RUR 35 billion. Have the import phaseout programs brought any results in the agriculture yet? Recently I have seen products of 7

8 Interview Agro-Invest s greenhouses on sale. That means that our people will be buying cucumbers, tomatoes and greenery grown in our region. I see no pending food shortages. That holds true of dairy and meat products, too. Kaluga region has been ranked first in Russia in terms of dairy output growth (+14% by agricultural companies). That growth was achieved after several new dairy farms were launched. Beef production has a high growth rate, too. At the end of the year the livestock is expected to grow by 7,000 livestock units (+27%). In 2016 an even higher growth rate is expected mainly due to investments by Miratorg. I am convinced that with those growth rates we will make it to the leading regions of Central Federal District. In 2015 Kaluga region was awarded the first place by the National Investment Climate Rating in the category Support of Small and Medium-Sized Business. Support of small and mediumsized business is a top priority in the current development format of the Russian economy. Will Kaluga region be implementing any supplementary support measures for small and mediumsized business? I would say that the year 2016 will be the year of small and medium-sized business. Firstly, small and mediumsized businesses provided for the majority of jobs. We will be working hard to prevent unemployment growth. Secondly, large companies account for only 27% of all companies in Kaluga region. Most of our manufacturers are medium-sized companies, which have fully occupied the field of services, food and science-intensive products. Now we are facing the difficult task of raising the share of entrepreneurs and encouraging them to grow. First of all we need to have microbusinesses step out of the shadow. Microbusiness is currently dominated by confusion as many people actually have a business but have not had themselves registered as individual entrepreneurs, pay no taxes and do not have their employees on official payroll. Such businessmen look down at their colleagues who have chosen to abide by law. Surprisingly, entrepreneurs of the former group are the ones who complain about hurdles We intend to revise our system of financial and non-financial support, too. A high demand has been registered for support to receive loans. Our objective is to help each small business find the right credit organization. to business development and a too high tax burden. The region s administration has a crystal clear message for them: get yourself an official status and you will become eligible to tax benefits. Today microbusinesses do not have to have an accountant as they are eligible to simplified or patent taxation. Patent taxation is a godsend for craftsmen who make fashion and interior accessories. They only need to buy a patent once. Also, a 2-year tax holiday has been introduced for newly set up businesses, who have selected simplified or patent taxation. A regulation is being developed now, which will expand the list of activities eligible to tax benefits. We intend to revise our system of financial and non-financial support, too. Today we are receiving increasingly less requests for subsidies to finance equipment purchases or leases of premises. A high demand has been registered for support to receive loans. On average loans extended to small businesses have dropped by 36% nationwide and by 30% in our region. Some banks refuse to extend loans to small businesses altogether. That is unacceptable. Our objective is to help each small business find the right credit organization. Also, the system of finding investors for small and medium-sized businesses will be revised. Several organizations operate in the region, which offer the required support to small and mediumsized businesses through cooperation with foundations, business missions. Those efforts are now brought together under the ministry of economic development, which will be shutting down inefficient programs and carrying on with programs, which have yielded the expected results. Today, for example, there is no need to pay business trip costs for large delegations. Instead, investors and bankers can be invited to a large forum on small business in Kaluga region. Our businessmen have come up with such an initiative. Many Russian regions have cut their costs in the budget for Where does Kaluga region stand on this and can any reductions in the financing of regional programs be expected? Such reductions were already made in late January when the budget was adopted. We have primarily optimized cost items, which have no social value while being very expensive, such as construction of new administrative buildings, purchases of new hightech equipment instead of repairing the available equipment. It is not the right moment for entertainment and large-scale celebrations. However we decided to carry on with the Pure Water Program, which modernizes water supply systems in our municipalities. The infrastructure in Kaluga Special Economic Zone is still being set up. The construction of the Southern Bypass Road is in full swing. We are prepared to fulfill all our obligations to our investors as regards construction of the required infrastructure and connections to the utility systems. Our key goal today is to implement projects in order to reach the expected results rather than for the sake of the project itself. Each invested ruble needs to bring RUR 12 to RUR 15 in investments and each invested million will bring a dozen new jobs. Most importantly, the governor and his team are, as always, confident that they will achieve success. 8

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10 Facts and Figures Investments 2015 rur billion investments in into the industrial sector in the period from 2006 to 2015 (under agreements) rur billion rur 40.7 billion in 2015 in actual investments in the region s economy (in the period from 2006 to 2015), including rur 92.5 billion in investments in fixed assets in % compared with investment agreements and projects have been put on the register of the region s ministry of economic development since 2006, including 18 agreements in production facilities were opened in the period from 2006 to 2015, including 25,000 new jobs have been created since 2006, including rur 17.2 billion in taxes paid by investors in the 9 months of 2015, including 9 production facilities openings in ,800 jobs in 2015 rur billion paid to the federal budget rur 4.44 billion paid to the region s consolidated budget 10

11 Facts and Figures Clusters 2015 Pharmaceutical Cluster 62 companies production facilities opened > 80% share of FPPs in total output 155 investment projects are implemented in Kaluga region automotive cluster 30 companies 2015 VW engine plant opened Training centers Agricultural Cluster 110 robotic dairy farms 2015 Rosva Biotechnological Complex opened 9 branches Tourism Cluster 4,000 historical and cultural monuments 100 hospitality companies 2,6 growth of tourist flow since 2008 Transport and Logistics Cluster Rosva Freight Village Vorsino Freight Village 2015 Kaluga International Airport opened 25,5 growth of freight turnover since 2007 Information and Communication Technologies 107 companies 30 research organizations 27 institutions of higher education Aviation and Space Technologies 22 companies RUR 6,9 billion in output value ORPE Technologiya is the cluster s head organization 11

12 Facts and Figures Industry ,747 industrial plants operate in the region, including 285 large and medium-sized companies rur million in support of small and medium-sized business in growth of the industrial output since 2006 (in nominal values) rur billion value of shipped products in % share of the industrial sector in the region s GRP 90.9% IPI rur 42 billion in tax and non-tax revenues of the consolidated regional budget in 9 months of 2015 Agricultural sector 2015 rur 39.8 billion in investments into the agricultural sector since 2006, including rur 36.7 billion value of agricultural produce* 51 dairy farming complexes 209 agricultural companies rur 2.7 billion in % growth compared with % growth of milk production at farming complexes in 2015 rur 1.62 billion in government support in 2015 *in actual prices of rd место in Central Federal District in terms of milk production 12

13 Facts and Figures Industrial Production Breakdown 2015 Economic Activity share (%) Total shipments by the industrial sector 100 Mineral production 0.6 Manufacture, including 95.8 food production, including beverages and tobacco timber processing and wood products, except furniture pulp and paper production, publishing and printing chemical production % growth of resins and plastics production 121.2% growth of non-metallic mineral products 107.6% growth of pharmaceutical production resins and plastics production 2.1 other non-metallic mineral products, including construction materials metallurgy and finished metallic products 12.5 machines and equipment 3.7 electrical machines and equipment 13.2 vehicles and transport equipment % growth of food production, including beverages and tobacco 114.3% growth of metallurgical production 13

14 Facts and Figures Ratings 2015 st 1in the category Support of Small and Medium-Sized Business nd 2in the National Investment Climate Rating of the Russian Regions (by the National Rating Committee) 1st in Central Federal District and 2nd in Russia in terms of manufacture per capita 1st Nikola Lenivets Landscape Park: 1st award in the category Best Site for Event Tourism Development: Natural and Recreational Zones 1st in Central Federal District and 12th in Russia in terms of the industrial sector production per capita 1st Kaluzhsky Krai: 1st award in the category Best Regional Tourist Information Center (Russian Event Awards) 1st in Central Federal District and Russia in terms of the birth rate. In 2014, with 12,953 newborns, the highest birth rate was registered in Kaluga region over the past 26 years. 4th in Central Federal District and 9th in Russia in terms of construction of residential property per 1,000 people 2nd in Central Federal District and 16th in Russia in terms of performed construction works per capita nd Governor Anatoly Artamonov of Kaluga region has been rated 2nd in the 2015 Governor Efficiency Rating (Civil Society Development 2Foundation) 14

15 Openings and Agreements 2015

16 Events Openings 2015 First Resident in Obninsk Innovation Zone 21 January ObninskEnergoTekh CJSC, the first company in Obninsk Innovation Zone, opened its complex there, which includes a production and R&D facility. The complex was built in cooperation with the administration of Kaluga region. The investments into the complex reached RUR 180 million. ObninskEnergoTekh is a Russian developer and manufacturer of hightech energy- and resource-efficient products and an award winner of the 2013 TechUp National Rating of Fast-Growing High-Tech Companies. ObninskEnergoTekh is one of the ten leading innovative companies of Russia. Omega Lease-Kaluga s Production and Logistics Center 15 March The second stage of the production and logistics center of Omega Lease- Kaluga LLC with a total area of 27,839 m2 was put into operation. That is an A class facility located in Vorsino Industrial Park. The second stage of the complex was built based on the build-to-suit concept. The complex is designed in compliance with the lean production principles, which will help potential lessors minimize their energy costs and warmth losses. With the costs of the services of natural monopolies constantly growing, a special focus was placed on energy efficiency at the design stage. Novo-Nordisk Insulin Plant 10 April Novo-Nordisk opened a high-tech plant in Grabtsevo Industrial Park. The plant is the only insulin production facility in Russia built from scratch. Investments into the project totaled USD 100 million. The plant has a staff of 150 people, which is expected to grow. At the plant insulin solution will be made, and Penfill cartridges and FlexPen pen needles will be filled and packed. The plant s output is expected to fully satisfy the domestic demand. Cellino S.R.L. Launched Automotive Parts Production in Kaluga 16 April The first production facility of SMK LLC, a subsidiary of Cellino S.r.l., was opened on the premises of Kaluga Engine OJSC. Investments into the project reached EUR 10 million. The project will be implemented in two stages. At Stage 1 a production line of aluminum fuel tanks for trucks will be launched. At Stage 2 production volumes are expected to grow and the product range will be expanded to include steel fuel and oil tanks, frame components and cross pieces, truck and car body components. With the launch, a new robot welding line, a know-how of Cellino S.r.l., was put into operation, too. 16

17 Events Kaluga Airport: Construction Completed 25 May Kaluga International Airport was opened. This Class B airport will be accommodating Airbus A-319, Boeing s Boeing-737 and other aircraft. The terminal has a capacity of 100 passengers per hour. The passenger flow is expected to reach 500,000 people per year by Starting from 2016 the airport will be offering maintenance services to business aviation and aircraft hangar storage services. In terms of its construction time frame, financing, technologies and period of implementation, the project of Kaluga International Airport is a unique project as the construction of the airport began less than one year ago. Lafarge s Alternative Fuels 1 june An alternative fuel shop was put into operation at Lafarge s plant in Russia. That marked a launch of an energy efficient and environmentally friendly technology. Investments into the project exceeded RUR 240 million. The shop has a capacity sufficient to process 450,000 t feeds per year. Utility and industrial waste and used tires will be used as alternative fuels. The available concrete ovens will process the waste in full and in compliance with the environmental standards. By the end of 2015 natural gas had been replaced with alternative fuels for 15% and by 2020 that figure is expected to reach 45%. Niarmedic Pharma s Unique Plant in Russia 5 june Niarmedic opened a pharmaceutical plant in Obninsk Industrial Park. The total area of the plant is 22,000 m2. Investments into the project reached RUR 4 billion. The plant will have a capacity of up to 100 million packages of medicines per year. The staff of the plant includes 185 people. The plant will be operating in compliance with the requirements of GMP, ISO and FDA. Uniquely, the plant accommodates the whole production cycle, from synthesis of feeds to finished products. The plant s product range includes its own proprietary products. The plant in Kaluga region will produce about 20 products. That will help reduce the dependence of the country on imported pharmaceuticals. 17

18 Events Rosva Biotechnological Complex: New Development Level of Biotechnologies 23 june A lift conveyor was put into operation at the advanced wheat processing complex of Rosva Biotechnological Complex in Rosva Industrial Park. The processing complex with an annual capacity of up to 250,000 t wheat will launch its operations in full in The company will create about 300 jobs and the project s total investments exceed RUR 10 billion. The complex will satisfy the key requirements of the Russian economy such as implementation of innovations, imports phase-out as regards food and supplements, new jobs, food security, a switch of the Russian economy from a commodity-based model to the processing high-tech economy. Timber Complex of Plitspichprom CJSC New Production Facility for Construction and Road-Building Branches in Kaluga Region 26 june Set up in 2007, Transsnabstroi opened new industrial sites. The company s key activities include construction, road reconstruction and repairs, industrial and civil engineering. Transsnabstroi has four production facilities and a fleet of road machines and vehicles exceeding 370 units. The company participated in the construction and reconstruction of roads and sites for such investment projects as the construction of Volvo-Vostok, Volkswagen Group Rus, Peugeot-Citroen-Mitsubishi, Lafarge Cement, Magna, General Electric, Samsung. 20 August Plitspichprom CJSC, one of the leading companies of the Russian timber industry, opened a timber complex. The annual design capacity of the complex is 51,623 m3 (120,000 m3 of round wood). The key products in the plant s product range will be lumber, planed bars, edged boards, bloc houses, imitation bars, floor boards, euro-batten and other timber products. The project s investments exceeded RUR 1 billion. The plant accommodates a full production cycle, from logging to finished products, and is a brilliant example of imports phase-out. 18

19 Events Regional Engineering Center 25 August The Regional Engineering Center was opened in Obninsk on the premises of the Active Molecules Park Biopharmaceutical Alliance of Competences. The center will serve as one infrastructural site that will be offering services of technology engineering to small and medium-sized biopharmaceutical companies in Kaluga region. The center is equipped with analytical, laboratory and technological capacities, which can be used both to reach individual goals and to perform the whole range of works related to the implementation of a biopharmaceutical project. According to preliminary estimates, the Regional Engineering Center can help start up 5 to 10 new innovative pharmaceutical companies per year. Volkswagen Engine Plant 4 September An opening ceremony was held of a new engine plant of Volkswagen Group Rus in Grabtsevo Industrial Park. An 1.6 MPI (EA 211) engine was the first engine that rolled off the assembly line. The new 32,000 m2 plant is located in the immediate proximity of Volkswagen s car plant. The project s investments totaled EUR 250 million. The plant created about 400 new jobs. It has an annual capacity of 150,000 engines (about 600 engines a day). The engines will be installed in Skoda Rapids and Volkswagen Polos, which are made at the car plant of Volkwagen in Kaluga, and Volkswagen cars, which are manufactured in Nizhny Novgorod, such as Jetta, Skoda Octavia and Skoda Yeti. 19

20 Events OFK-Kardio s High-Tech Capacities 30 September High-tech production facilities of the joint project of the Modernization. Innovations. Development Foundation and the Active Molecule Park Alliance of Competences were opened at OFK-Kardio. For example, a capacity of conjugated monoclonal antibodies were launched. With those capacities, OFK-Kardio has become one of the few companies in Russia with a full development and production cycle of individual testing systems based on their own feeds (antibodies). OFK-Kardio develops and manufactures KARD-INFO, testing systems for diagnosis of acute myocardial infarction at points-ofcare. In May of 2015 the project Early Diagnosis of Acute Myocardial Infarction was approved by the Supervisory Council of the Agency of Strategic Initiatives chaired by President Putin. Early this year Governor Anatoly Artamonov of Kaluga region allocated RUR 1 million to purchase KARD-INFO testing systems for the region s emergency medical services and local health care services. Distribution Center 5 September The first stage of Pyaterochka retailer s distribution center was launched in Vorsino Freight Village. X5 Retail Group has become a resident of the modern logistics center in Vorsino. The total area of the warehousing facility is about 39,000 m2. Food will be supplied from the distribution center to retailers in Kaluga, Moscow and Smolensk regions. The managers of X5 Retail Group believe that the opening of the distribution center will help them fulfill their social obligations in relation to the local population through additional discounts and direct food supplies to the region s social institutions without any additional markups. New Treatment Facilities in Vorsino Industrial Park 9 September Biological treatment facilities with a capacity of 4,000 m3 per day were opened in Vorsino Industrial Park. The area of the facilities is 17,825 m2. The project s investments totaled RUR 230 million. The applied treatment technology will help efficiently reduce chemical and biochemical oxygen demand and other contaminating substances in waste water. This infrastructural site was designed in a manner to take into account the needs of all the plants in the park. So far 15 residents have been connected to the facilities, which is less than 10% of their capacity. The resulting surplus capacity is expected to be used as the north-eastern territory of the park and the Borovsk site of Kaluga Special Economic Zone continue to develop. AstraZeneca Opens First Full Cycle Plant in Russia 10 October AstraZeneca, an international biopharmaceutical company, opened its plant in Vorsino Industrial Park in Russia. The company invested USD 224 million in its project in Kaluga region. In additional to production activities, the new plant acts as a R&D center and offers continuous medical training and patient support programs. By 2019 the full cycle production (from dosage forms to packages) output will reach about 500 million pills. The design capacity is 1.5 billion pills per year. The design capacity of the production facility is over 40 million packages or about 850 million pills per year. The plant will be making about 30 innovative medicines of AstraZeneca for treatment of cancer, heart, gastroenterological, psychic and long conditions. Those medicines account for 30% of the company s product range in Russia. The production facility has a staff of about 300 employees, who have been trained in compliance with international standards. 20

21 Events Food Warehousing Facility 31 October Russky Produkt put into operation a warehousing facility in Detchino. Built based on innovative technologies, the warehousing facility has a storage process in place, which complies with today s advanced requirements. Russky Produkt needed a new warehousing facility as it expanded its production facilities and moved some of its workshops to Detchino from Moscow. Currently, the plant in Detschino has a product range of about 160 items, including instant coffee, soup mixes, spices, kissels, baking mixes, etc. The warehousing facility has an area of 10,000 m2. The staff at the facility includes 30 people. Antonius Medvision Health Care Center 15 December Antonius Medvision, a joint project of Russia and Germany, opened a health care center in Grabtsevo Industrial Park. The center will be offering medical checkups, medical and consulting services. Kaluga region has been a partner of Antonius Medvision for 8 years. The company offers medical services to the companies located in Rosva, Vorsino, Grabtsevo and Ferzikovo Industrial Parks and, as a participant of the government guarantees program, free medical services to the population of Kaluga region under an obligatory medical insurance policy. Antonius Medvision has a staff of 100 people who have at their disposal advanced equipment, effective medicines and 10 ambulances, several of them are equipped to serve as ICUs. Triada-Impeks Production Facility 1 December Triada-Impeks (Triada-Holding) opened a production facility in Vorsino Industrial Park. The key activity of the plant in Kaluga is manufacture of specialty cement- and polymer-based mixes for repair, reconstruction, waterproofing and plugging-back works. The plant is equipped with advanced LAHTI Precision OY equipment capable of producing materials, which will satisfy the strictest requirements of the construction branch. Goncharov Hotel, First Government- Private Partnership Project 25 December Goncharov Hotel, a guest house in the Polotnyanyi Zavod mansion complex, was opened as part of government-private partnership. Uniquely, the partnership is governed by the first concession agreement, which ever was made in Russia in relation to a heritage property. Alpinex from Austria started the restauration works in In addition to the hotel, the mansion includes a literary café and a home church of the Goncharov family, which is currently under reconstruction. A private museum of paper is expected to be opened soon. The mansion can boast unique interior, household an furniture items of the early 19th century. Its 18th century architecture is turning the museum complex into a national tourist attraction. 21

22 Events Hygiene-Service from Kaluga Region Opened New High-Tech Production Lines An official opening ceremony of production line of MEED adult diapers has been held at Hygiene- Service LLC in Kondrovo of Kaluga region. The ceremony was attended by Gulnaz Kadyrova, Deputy Minister of Industry and Trade of the Russian Federation, Aleksei Komissarov, Director of the Industry Development Foundation under the Russian Ministry of Industry and Trade, Aleksandr Avdeeev, Deputy Governor of Kaluga Region, Chief Federal Inspector Aleksandr Savin of Kaluga region, and Aleksandr Bushin, Director General at Hygiene-Service. The new production lines will be the 19th and 20th production lines opened since the establishment of Hygiene- Service in the Russian market. The maximum annual capacity of the lines will be 180 million items. The diapers will be made of environmentally friendly absorbing materials, which are very efficient at catching moisture and eliminating odors. The product will have consumer and technical properties compliant with the requirements of the government standards (GOST). The products can be used both in health care institutions and at home, including any emergencies. Aleksandr Bushin, Director General of Hygiene-Service, said the following: This is the largest project of its kind in Russia and it will create new jobs, pay more taxes and phase out imports. Most importantly. This is a social project. It has been our conscious choice. We are fully aware of our responsibilities and are committed to produce high-quality products, which will help millions of people live a life worth living and be actively involved in the public life. With the investment project of production of MEED adult diapers implemented jointly with the Industry Development Foundation, Hygiene-Service will end up among the leading Russian companies as regards imports phase-out. The project is of paramount importance as currently only 10% of diapers is produced in Russia. The annual domestic demand in adult diapers has already exceeded 700 million diapers. According to estimates, the products of Hygiene-Service Med will phase out 50% to 55% of foreign-made products. As a result, the prices of personal care are expected to drop significantly. Noteworthy, the production of hygiene products to phase out foreign-made personal care products is one of three projects in Kaluga region, which have enjoyed support of the Industry Development Foundation. Hygiene-Service has invested RUR 1.3 billion in the production lines, including RUR 500 million, which it has received as a low-cost loan from the foundation. Gulnaz 22

23 Events Development Milestones Established in 1994, Hygiene-Service LLC offers over 100 feminine hygiene products. The company produced over 2,000,000,000 packages of medical hygiene products. In July of 2015 the Expert Council of the Industry Development Foundation under the Russian Ministry of Industry and Trade approved a rur 500 million loan to the company for implementation of a project of production of adult diapers as part of import phase-out efforts. Ours is the largest project of its kind in Russia and it will create new jobs, pay more taxes and phase out imports. Most importantly, our project is a social project. The total project costs reach rur 1.3 billion. Hygiene-Service LLC intends to produce and sell 160 million diapers in Kadyrova, Deputy Minister of Industry and Trade, spoke about the short implementation time frame of the project: The production project of MEED adult diapers is the first project, which has been financed by the Industry Development Foundation. The financing has been made possible by Law On Industrial Policies, which was adopted in December of The company received the financing from the foundation in the second half of 2015 and is launching the production now in February of I would like to thank the whole project team, who starting from the negotiations kept working in a consistent and responsible manner, everyone who has made this project possible. It should be noted here that the company is committed to carry on. The managers are in the process of negotiations with several banks on potential financing of a project to produce equipment for hygiene products for adults and children. Mr. Bushin is confident that the quality of both the equipment and the products will be compliant with the global standards. A social focus, planned production growth and development, a higher turnover of Russian-made high-quality products all those are the elements of the strategy, which has proved its efficiency over the past 20 years. An annual capacity growth of million items is expected. The production line has a capacity of 200 diapers per minute. By 2019 the company intends to launch Russian-made production lines of diapers for adults and children. By 2020 the company intends to fully switch over to Russian-made feeds, materials and components. 23

24 Events Agreements /02 Kaluga Region and Berlin-Pharma: at New Stage of Development Governor Anatoly Artamonov of Kaluga region and Hans- Jorg Kilian, a Board member of Berlin-Chemie AG from Germany, signed an agreement on implementation of a construction project of a warehousing facility of Berlin- Pharma CJSC. The warehousing facility will help enhance the capacity of the company s pharmaceutical plant in Kaluga region. The project s investments total EUR 10 million. The plant of Berlin-Chemie Menarini in Kaluga region was opened in May of The capacity of the plant is 47 million packages of medicines per year. The investments in the construction of the plant exceeded EUR 40 million. 03/02 Pharmaceutical Cluster in Kaluga Region and Skolkovo The Skolkovo Foundation and the Active Molecules Park Biopharmaceutical Alliance of Competences signed an agreement on cooperation in the field of technologies. Under the agreement a shared knowledge center for Skolkovo s projects will be set up on the premises of the Active Molecules Park in Obninsk. In their turn, the members of the alliance will receive a Skolkovo resident status and will become eligible to tax benefits and the foundation s support in the form of grants and infrastructure. The resulting concentrated competences and innovations flow will open up new opportunities for the development of the Russian pharmaceutical industry. 18/02 RPM Group and Pyaterochka X5 Retail Group announced a launch of cooperation between the retailing network of Pyaterochka and RPM s Pemputmash in Kaluga Region. On the same day the first training center was opened at Remputmash for its staff members, who will be getting a job at Pyaterochka. Similar training centers will be opened at 10 of RPM s companies. The offered training program will be free for its participants and will last 21 days. Annually, the training centers will train up to 3,000 people in the following fields: stock management, operational engineer, etc. The trainings will be offered to the staff members of Remputmash and the staff members of other companies, who have become redundant. 24

25 Events 12/05 AstraZeneca and the Active Molecules Park AstraZeneca announced a launch of the first project, which will be implemented as part of the Open Innovations initiative aimed to develop new medicines. The project will be implemented jointly with the Active Molecules Park Biopharmaceutical Competences Alliance and its Scientific and Research Center, which form the innovative core of the pharmaceutical cluster in Kaluga region. The participating scientists will be conducting pre-clinical trials of a molecule of AstraZeneca, which has a large potential as regards the treatment of various types of malignant tumors. The resulting experience and scientific and research potential will serve as a basis for new anti-cancer medicines. 16/04 Special Economic Zone Expanded Dmitry Medvedev signed a regulation on a new 432 ha lot to the Special Economic Zone. The new lot is located in Borovsk District along the border of Moscow. The new lot was added as the Special Economic Zone is developing at a fast pace and the first lot in Ludinovo is almost fully occupied by four companies, which implement their projects there. Almost half of the lot is occupied by Agro-Invest, the largest greenhouse complex in Central Federal District. The new lot is a unique offer as investors can receive a production site within a short period of time and almost free of charge. 27/04 Trilateral Agreement The governments of Kaluga and Bryansk regions and the administration of Smolensk region signed a trilateral agreement on the development of unified approaches and standards, which will be applicable in various fields of activities. The parties have agreed to cooperate in the following fields: industry, investment policies, agriculture, public health, utilities, energy, science and high technologies, education, small and medium-sized business, communications and IT, construction, sports, tourism, transport, social security, etc. 26/05 AKOTEKH Altai Polymer Composite Cluster The Association of the Cluster of Aviation and Space Technologies of Polymer Composite Materials and Designs (AKOTEKH), the Association of the Altai Polymer Composite Cluster and the Innovative Development Agency of Kaluga region signed a trilateral agreement on cooperation. The parties to the agreement intend to join their efforts as regards the development and manufacture of hightech innovative products and their distribution. The cooperation will include joint research and development efforts, infrastructural projects and other activities. 25

26 Events ц 08/06 Audit Analytic, New Resident of Kaluga Special Economic Zone The government of Kaluga region and Audit Analytic LLC signed an agreement on construction of a timber plant in the Lyudinovo lot of Kaluga Special Economic Zone. The project s investments will be RUR 3 billion. The project will provide for sustainable forest management and will result in a no-waste production facility of energyefficient pre-fabricated cement fiber mat-based housing. The annual output is estimated at 3,000 finished houses per year (with an average area of 140 m2) or over 400,000 m2 of private homes. The project will be a pioneer in the Russian construction industry as regards assembly-line construction of low-rise housing. 19/06 Kaluga Region and St.-Petersburg Expand Cooperation At the St.-Petersburg International Economic Forum Kaluga region signed an agreement on cooperation with St.-Petersburg. The agreement provides for more partnership in the following fields: trade and economy, science and technologies, culture, social, innovations and investments. Organizations in Kaluga region and St.-Petersburg will be exchanging economic information and establish business relations with each other. More contacts are provided for in science, education, public health, environment protection, culture, tourism and sport. Kaluga Region and the Russian Technological Development Foundation ц Kaluga region signed an agreement on cooperation with the Industry Development Foundation (established under the Russian Technological Development Foundation). The cooperation will be aimed to support industrial companies that implement high-tech projects. The Foundation is prepared to offer financing to such projects for a period of 5 years at 5% per year. By August 15 local companies had supplied 19 project requests to the Foundation. On 31 August its Expert Council selected the following 3 projects to finance: projects of Hygiene-Service, Niarmedic Plus and Elektronika (Kraftway). The latter project is aimed to develop computers based on the company s platform. 24/06 26

27 Events 27/07 18/08 The Krasin Pencil Factory LLC, First Resident in Borovsk site of Special Economic Zone The government of Kaluga region and the Krasin Pencil Factory LLC signed an agreement on the construction of a plant, which will be manufacturing office and school supplies. To set up its plant the company had selected the Borovsk site of the Special Economic Zone. Investments in the plant equal RUR 300 million. The plant will have a staff of 600 people, including 300 disabled people. The plant s products will be sold in Russia and CIS countries. The plant will be running on Russian feeds. The plant s capacity is expected to reach its maximum in /08 D.A. Rus to Build a Plant The Governor Anatoly Artamonov of Kaluga region and Li Dong Zhu, Director General at D.A. Rus, signed an agreement on the construction of a plant, which will be manufacturing rubber and plastic products. The project s investments equal RUR 500 million. The plant will be built in Vorsino Industrial Park in D.A. Rus is a manufacturer of components for household devices, which are assembled at Samsung Electronics Rus Kaluga (in Kaluga region) and LG Electronics Rus (Moscow region). Innovative Medical Center in Obninsk The National Medical Radiological Center of the Russian Ministry of Public Health, the government of Kaluga region and Gamma Ventures Group Inc. signed an agreement on the establishment of an innovative scientific center Gamma Knife. A gamma knife is a device able to penetrate a tumor without damaging healthy tissues. The center in Obninsk will be running one of the five devices available in Russia. The new center will be established under the Obninsk Medical Radiological Scientific Center, a branch of the National Medical Scientific Center. The center will have a clinical unit and a team of developers of precision XRTs. 09/09 Kaluga Region and Russian Railways Sign Memorandum on Cooperation During his visit to Kaluga region Oleg Belozerov, President of Russian Railways OJSC, signed a memorandum on cooperation with the government of Kaluga region, which provides for more projects in transportation, implementation of joint programs of innovative railway machinery development in Kaluga region and cooperation in efficiency of local passenger carriage. 27

28 Events 14/10 Chinese Building and Railway Specialists Choose Kaluga Region Two official documents were signed in Beijing. A memorandum on cooperation between Kaluga region and the Chinese Federation of Construction Materials confirmed the intentions of both the parties to develop cooperation, primarily through Chinese investments in Kaluga region and facilitation of negotiations with potential partners. The other document, an agreement on cooperation between the Chinese Federation of Machine Building and Kaluga region, opens up new opportunities to attract Chinese capital, to launch new machine building facilities in cooperation with Kaluga companies. 18/11 Tourist Hub in Kaluga Region Two agreements were signed at the 5th Tourist Forum in Kaluga: an agreement on cooperation between the region s ministry of culture and tourism and the Russian Association of Travel Agents, which is aimed to develop domestic and international tourism, and an agreement between the Dialogue of Cultures Foundation and the Russian Association of Travel Agents on a tourist hub, which is expected to be set up on the premises of the Etnomir Center of Culture and Education. The tourist hub will serve as a basis for the promotion of the regional and national tourist product to the international and domestic market. 23/10 Kaluga Region to Cooperate with the Association of Russian Diplomats At the Etnomir Center of Culture and Education an agreement on cooperation was signed by the government of Kaluga region and the Association of Russian Diplomats, a Russian public organization. The agreement is designed to develop the foreign economic relations of Kaluga region with other countries and to promote the region in the global community. The agreement provides for a bilateral exchange of economic information and establishment of a business relationship between the organizations. 28

29 Events Kaluga Region and the Republic of Ingushetia The minister of culture and tourism of Kaluga region and the chairman of the Committee for Tourism of the Republic of Ingushetia signed an agreement on cooperation. The agreement lays the framework for the promotion of the tourism potential of the Russian regions in the run up to the 2018 FIFA Football World Cup. The key obligations of the parties under the agreement include development of equal and mutually beneficial cooperation between national and regional tourism organizations, rendering support to their initiatives and generation of a single tourism environment. 23/11 17/12 Pharmaceutical Cluster in Kaluga Region and BIOTURKU Cluster from Finland The Agency of Innovative Development Center of Cluster Development of Kaluga Region JSC, Kaluga Pharmaceutical Cluster Non-Profit Partnership and BIOTURKU, a cluster from Turku, Finland, signed an agreement on cooperation. The goal of the agreement is to establish partnership in the following fields: development of infrastructure, implementation of joint training programs and cooperation in science and research. The agreement also enables small and mediumsized companies from Kaluga region to participate in the TEKES contest in Finland and to receive support as regards commercialization of their projects and developments. 21/12 Vesta Park Chooses Kaluga Special Economic Zone The government of Kaluga region and Vesta Park JSC signed an agreement on the construction of a plant, which will be manufacturing metal structures and sandwich panels. A preliminary agreement has been reached to build a 14.2 ha plant in the Borovsk site of Kaluga Special Economic Zone. The project s investments are estimated at RUR 2.3 billion and the staff of the plant will include over 600 people. The products will comply with ISO quality standards and any other standards effective in the territory of the Russian Federation. The expected annual capacity of the plant is 24,000 t metal structures and over 1 million m2 sandwich panels. 29

30 Anniversary ООО БАНК «ЭЛИТА» Reliability Runs in Our Tradition 25 th Anniversary of Elite Bank Today the key goal of Elite Bank is to act as a reliable financial partner to its clients and to continue operating at a high professional level. Over the past 25 years the bank has contributed significantly to the economy of Kaluga region through offering support to small and mediumsized businesses operating in the following branches: industry, construction, trade, agriculture, state-owned companies and municipalities. Elite Bank has always seen cooperation with small and medium-sized businesses as one of its priorities. We believe that small and medium-sized businesses provide for the stability and sustainability of the economy. In our opinion, banks with a focus on cooperation with small and mediumsized businesses can compete with large federal players in regional banking markets. In the current economic situation most companies are facing the same issue, i.e. a lack of an adequate security. The issue arises as the company is willing both to finance a new project (production facility) and to expand the existing production capacities as most companies lease their production facilities and the available equipment is of an inadequate quality and relatively depreciated. Elite Bank has solved that issue together with the State Small and Medium-Sized Business Support Foundation. Now a guarantee of the Business Support Foundation of Kaluga region can serve as the required security. In 2015, loans extended to small and medium-sized businesses under guarantees of the foundation totaled RUR 45.7 million. Vadim Vantsov, Board Chairman I would like to congratulate the management of Elite Bank on its 25th anniversary. The bank has been one of the most reliable partners of Kaluga region for many years. The managers of the bank focus on support of small and medium-sized businesses, implementation of agricultural projects and assistance in the development of innovative production facilities. As an experienced banker, I understand that following those priorities in financial policies is complicated and that it will only pay off in the long term. For that reason I would like to wish the bank success and prosperity, more clients, profitable assets and, obviously, successful development and further improvement. Alexey Laptev, Deputy Governor of Kaluga region 30

31 Anniversary Projects of Elite Bank Vorsino Industrial Park With a total area of 2,190 ha, Vorsino Industrial Park is the largest industrial park in Kaluga region. Investors who choose to set up their production facilities in the park, will receive prepared land lots with an access to customs and logistics terminals, high tax benefits and comprehensive support at all project stages. Kaluga International Airport A Class B airport, Kaluga International Airport accommodates Airbus Airbus A319, Boeing s Boeing and other similar or smaller aircraft. In 2015 the airport had an annual passenger turnover of over 10,000 people and accommodated 518 flights. The airport won at the 2nd National Air Gateway of Russia Award in the category: 2015 Best Regional Airport with an annual passenger turnover of up to 500,000 people and was elected by journalists 2015 Airport of the Year. Robotic Farms Elite Bank contributes to the development of the region s agriculture. The bank offers loans to farms to set up robotic operations and to develop farmland for the cattle at the farms within the framework of the program Setting up 100 Robotic Dairy Farms. Waste Sorting Facility Located in Sukhinichi, the waste sorting facility serves the following districts in Kaluga region: Sukhinichi, Duminichi, Lyudinovo, Kirov, Zhizdra, Meschovsk, Babynino, Kozelsk, Peremyshl and Ulyanovo. The facility is designed to operate for the following 40 years. The estimated solid municipal waste to be processed by the facility reaches 166,869,000 m 3. The annual capacity of the facility is 120,000 m 3. CARD-INFO Testing Kit (by OFK- Kardio) for Early Diagnosis of Myocardial Infarction at Points of Care The testing kit requires 1 drop of blood to identify any injury to cardiac myocytes (cardiac muscle cells) within 1 to 1.5 hour of the first symptoms of the condition. With that, health care specialists can start the required treatment and avoid a therapeutic failure. Elite Bank has been operating in the banking market since 1991 (license No of the Russian Central Bank). Kaluga region represented by its ministry of economic development and Development Corporation of Kaluga Region JSC participate in the bank and that enhances trust the bank s clients and the whole population of Kaluga Region have in it. In 2015 AK&M and RIA Rating confirmed the national scale credit rating of Elite Bank at B++. Key Services Deposits / Loans Money Transfers / Foreign Currency Banking Cards 10, Moskovskaya St., Kaluga Tel.: (4842) elita@kaluga.net 106, Grabtsevskoye Shosse Kaluga Tel.: (4842) , Kaluzhskaya St. Obninsk Tel.: (48439) , Churilina St. Kirov Tel.: (48456) , Lenina St. Sukhinichi Tel.: (48451)

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33 Key Industrial and Infrastructural Projects in Kaluga Region

34 Key Projects Kaluga International Airport Development Stages and Trends 25 May 2015 Kaluga International Airport launched its operations. In terms of its short period of construction, financing and technologies, Kaluga International Airport is a unique project. Its runway was reconstructed within only 5 months. In the same period the taxiways, ramp and apron were built, too. The launch took place within less than a year after the construction began. 10 June 2015 An agreement with Komiaviatrans OJSC was signed on comprehensive aircraft maintenance. Under this agreement services are rendered in relation to aircraft, passengers, luggage and cargoes. The airline makes scheduled flights from Kaluga to St.-Petersburg and Sochi on Embraer ERJ-145 aircraft. 16 June 2015 The first scheduled flight IG-739 from Kaluga to St.- Petersburg is made. 23 July 2015 Scheduled flights to the Crimea (Simferopol International Airport) are launched by Center South Airlines on Russia s newest SSJ-100 aircraft. 18 August 2015 The airport received an official status. Deputy Chairman of the Russian Government Arkady Dvorkovich handed a regulation of the Russian Government on launching international flights and on establishing a multiway passenger border inspection post in Kaluga Airport to Governor Anatoly Artamonov of Kaluga region. 4 September 2015 The first international flight is made. A Dassault Falcon 7x landed in Kaluga bringing Board members of Volkswagen from Braunschweig (Germany) on an official visit to Kaluga. 16 September 2015 The results of the previous three months were evaluated. An unrivalled growth was registered since the launch of scheduled flights on 16 June as the airport had a passenger turnover of 5,059 people, accommodated 211 flights and handled 33.6 t of luggage. 1 October 2015 Certification of the management system in compliance with the requirements of ISO 9001 was started. 20 October 2015 Participation in the 8th Wings of Russia International Aviation Forum. 22 October 2015 Flights to new international and regional destinations were launched. 2 November 2015 A corporate charter program was launched where European airlines 2 to 3 times a week make charter flights to Russia for Volkswagen on Airbus Airbus A319. Formerly, specialists of Volkswagen flew to Vnukovo Airport. 21 December 2015 Seasonal charter flights were launched to Nis (Serbia). 23 December 2015 Kaluga International Airport received an active member certificate of the Airport Commercial Aviation Association. 9 February 2016 Kaluga International Airport won in the category 2015 Best Regional Airport with an Annual Passenger Turnover Under 0.5 Million Passengers and became 2015 Airport of the Year at the 2nd National Air Gateway of Russia Award. 34

35 Interview We are happy offering world-class service? Salavat Kutushev, Director General of Kaluga International Airport The year 2015 was probably the most important year in the history of Kaluga International Airport. But for the technical flight, which was made in December of 2014, other significant events all took place in 2015, including the opening, receipt of an official status, launch of regional and international flights. The passenger turnover in 2015 (starting from June 16 to be more precise) exceeded 10,000 passengers. The airport accommodated over 500 flights and handled about 60 t of cargoes. For example, the passenger turnover of Grabtsevo Airport at the time of the Soviet Union did not exceed 2,000 people. According to our estimates, in 2016 the passenger turnover of Kaluga International Airport can reach 60,000 to 80,000 passengers. The year 2016 has more in store for Kaluga International Airport. In February we will start expanding our destinations network, e.g. flights to Yerevan, the capital city of Armenia, which has intensive business and social relations with Kaluga, will be launched to be followed by flights to Kazan, Kaliningrad and Minsk. We have ambitious plans for the summer of 2016, too, launching flights to the Black Sea Coast, e.g. to Simferopol, Anapa, Gelendzhik, Sochi. These flights are on the subsidy program of the Russian Ministry of Transport and air tickets to those destinations are expected to be sold at an acceptable price. We understand that with a passenger flow of 250,000 people per year the maximum capacity of the existing terminal will be reached and the need will arise to expand the existing facilities. Obviously, we will be preparing for that as making designs takes much time and costs a lot. We keep engaging in cooperation with reliable and professional partners. Early this year Gazpromneft-Aero, one of the market leaders in Russia, assumed the obligations to fuel aircraft and helicopters. We are happy that the company believes in the potential of Kaluga International Airport and decided to cooperate with us. We, in our turn, are happy offering airlines world-class service, which has been proved by various European audits. We have ambitious plans for the summer of 2016, too, launching flights to the Black Sea Coast, e.g. to Simferopol, Anapa, Gelendzhik, Sochi. These flights are on the subsidy program of the Russian Ministry of Transport and air tickets to those destinations are expected to be sold at an acceptable price 35

36 Key Projects Reconstruction of M3 Ukraine Highway The reconstruction works are conducted under a long-term investment agreement between Russian Highways OJSC and Avtoban and will include widening of the carriageway of up to 7.5 m and of the hard shoulders on both sides of up to 3.75 m, construction of speed change lanes and entry lanes, 10 multi-tier junctions, 6 pedestrian bridges and a wildlife crossing. The existing bridge over the Ugra river will be reconstructed and another bridge over the river will be built. RUR 17,1 billion cost of reconstruction of 124 km 194 km On 26 June 2015 a capsulelaying ceremony was held to mark the beginning of the construction of a traffic junction as part of the reconstruction project of the M3 173 km to 194 km stretch. The reconstruction project includes widening works and bringing the highway in compliance with the requirements of 1B technical category, i.e. four lanes and no intersections. The carriageway will have a width of up to 7.5 m and each hard shoulder of up to 3.75 m with the same tarmac. The stretch will also get speed change lanes and entrance lanes. According to the ministry of public roads of Kaluga region by February of 2016 the reconstruction works had been performed as scheduled. The following works had been completed: reconstruction of a 40 km carriageway of M3 Ukraine Highway, construction of flyovers at junctions, electric lighting had been completed for 60%. Pillars are set for the new bridge over the Ugra river. Side hill filling works had been commenced at the stretch from 173 km to 194 km of the highway. Preparatory works are performed by a contractor at a junction, which will be built at km 173 of the highway. No works restricting the traffic will be conducted in winter time. 36

37 Key Projects Southern Bypass Road 4 Lanes On 18 August km Road stretch under construction the construction of the Southern Bypass road, including a third road bridge over the Oka river, began in Kaluga. The new road will redistribute about 80% of the traffic flows and keep out of the city over 7 million cargoes. Given the region s fast development, the road is to gain strategic importance. The bypass road will be routed around all the local settlements and will be built in the period from 2015 to The Southern Bypass road will be free. The general contractor of the project: Moscow Engineering 120 km/h Design traffic speed The project s total value is over RUR 10 billion 649 m Bridge length and Construction Company. The project s works include the following: construction of a 22 km road stretch of the category IB, construction of three new junctions and reconstruction of one existing junction, construction of a bridge over the Oka river, six flyovers at the junctions and two flyovers at intersections with local 4th category roads. The construction of the road is monitored by the administration of Kaluga Region. Ruslan Smolensky, Deputy Governor of Kaluga Region The two key road construction projects are of vital importance. Why are we building Southern Bypass Road? Now in order to get into Kaluga, you have got to go through numerous intersections of regional and municipal roads and the city streets. As a result the traffic is moving slowly giving way to traffic jams. In the restrained conditions of the city no broader streets, new junctions, entry lanes and reconstruction of the existing junctions are possible. The Southern Bypass Road in the proximity of Sekiotovo and Annenki and with a bridge over the Oka river will help solve those issues. With the new road, transit traffic will be routed around the city streets. In future the traffic in downtown Kaluga is expected to drop by 30%. Importantly, the project is not only about the bridge of the Oka river. It also includes the construction of a 22 km road stretch, three new junctions and 8 flyovers and the reconstruction of the existing junction. The project costs are estimated at RUR 12 billion. The construction will be completed in This project is very important for the development of areas on the right bank of the river. It needs to be implemented now and not 10 or 15 years from now. The road and the bridge will be promoting the development of the areas. The reconstruction project of the M3 Ukraine Highway will enhance the traffic safety and the transit capacity of the highway, which is of pivotal importance for Kaluga region. The highway will get 4 lanes, a median strip, electric lighting at the whole stretch length and barriers separating the median strip and the hard shoulders. Also, an automatic traffic management system is expected to be put into operation. New junctions will help get rid of all intersections and same-level left turns. The project will separate the turning traffic from the transit traffic by a median strip for more security, will include the construction of bus stops with pedestrian traffic at other levels. The old bridge over the Ugra river will be reconstructed and a new one will be built. Pedestrian bridges will be available all along the highway. So far the contractors have fulfilled their obligations and the works are performed according to the approved and agreed schedules. 37

38 Key Projects New Silk Road Advantages of the New Silk road: More Russian exports to Asia Access to the Russian and European markets for Asian countries A large distribution center Expansion of the existing facilities and construction of new ones On 27 January 2016 a farewell ceremony was held for the first container train departing from Dalian in China (formerly Dalny Port) to Vorsino in Kaluga region. The ceremony also marked the launch of the New Silk Way infrastructural project, which from now on will connect North- Eastern Asia with consumers and partners in Europe through the territory of Russia. Vorsino Freight Village in Kaluga region has now become a part of the New Silk Road. Cargoes from north-eastern China and South Korea will be shipped through the port of Dalian by the Chinese Eastern Railway and the Trans-Siberian Railway. Cargoes can include both finished products for consumers and components and materials for plants in Russia and Europe. Currently e.g. components for Samsung s plant in Kaluga region are delivered by sea, which takes over 50 days. With the New Silk Road cargoes are delivered three times faster 38 3 times

39 Key Projects On 27 January 2016 Kaluga region and the port of Dalian Group signed a memorandum on the establishment of a logistics corridor between Kaluga and Dalian. An agreement has been reached to generate conditions required for each party to offer logistics services for further cooperation and trade development. With its convenient location in the Russian Federation and the developing transportation and warehousing infrastructure, Kaluga region can be viewed as an important development link of the New Silk Road in Russia. A multimodal logistic center, Vorsino Freight Village is located on a 600 ha lot in Vorsino Industrial Park alongside the M3 Federal Highway, 67 km off the Moscow Ring Road and 20 km off Greater Moscow. Vorsino Freight Village combines three means of transport: by vehicle, by air (Ermolino Airport) and by railway. The infrastructure of the village include class B+ offices, a customs post of the Kaluga region customs, a temporary storage warehouse, an open cargo inspection site, a container terminal and a terminal for heavy trucks. On 11 November 2015 an agreement was signed by representative of Samsung Group and the government of Dalian District on declaring the port of Dalian to be the starting point of the New Silk Road. 5 February 2016 The first contained train from Dalian arrived in Vorsino Industrial Park. The trained covered 7,721 km over less than 10 days. That means that the New Silk Road provides for a three-fold reduction of delivery times of cargoes and goods from/to China and other Asian countries. Also, the new international logistics corridor is cheaper than most alternative logistic solutions. The first container train delivered components for Samsung Electronics. Today Vorsino Freight Village can receive 150,000 containers and has a potential capacity growth of up to 350,000 TEUs per year. Dalian An important financial, trade, industrial and tourist center located in eastern China, Dalian is the largest international transportation hub and logistics center. Trans-Siberian Railway By sea The New Silk Road This project is a brilliant example of cooperation between governments and business. Either party benefits from the implementation of the project: governments through more investments and new jobs and business through guaranteed delivery times, a good pricing and transportation growth. Vladimir Moldaver, Director of Moscow Railways, a branch of Russian Railways ВЕСТНИК 39

40 Pharmaceutical Cluster Key Goal: Get Effective Russian-Made Medicines to the Market Cluster Structure Manufacture of Finished Dosage Forms Research and Development of Original Pharmaceutical Substances and Active Molecules Training of Specialists the companies of the pharmaceutical cluster manufacture 109 pharmaceutical product items finished medicines account for 80% of the cluster s products the products manufactured by the cluster have a value of RUR 18 billion Medical Radiological Scientific Center of the Russian Ministry of Health Care and Social Development, State Scientific Center of Russian Institute for Physics and Power Engineering, a branch of the Scientific Center of Institute for Physics and Chemistry, Kaluga State University and a branch of National Nuclear Research University of Moscow Institute of Engineering and Physics in Obninsk 30 new projects in the portfolio of innovative projects of pharmaceutical companies in Kaluga over 10 pharmaceuticals are at the stage of pre- and clinical trials according to experts over the following 3 years companies and organizations of the pharmaceutical cluster will be bringing annually 2 to 3 new medicines to the Russian market The pharmaceutical cluster has 62 companies Large pharmaceutical production facilities opened in 2015: Cluster Excellence Bronze Label According to a survey conducted by the European Secretariat for Cluster Analysis in 2015 only 5 Russian clusters received a bronze label out of 750 participating clusters. The pharmaceutical cluster in Kaluga received the highest rating in the group Health and medical science. The cluster s activities had been compared with the activities of 19 leading European pharmaceutical clusters. Director of the European Secretariat for Cluster Analysis, Helmut Kergel, said that the activities of the pharmaceutical cluster in Kaluga had been rated best in terms of the following: bringing financing for R&D projects, the number of products and services developed by the cluster s participants, small business development, staff training, development of international cooperation and cooperation within the cluster. 40

41 Interview Niarmedic: 100% Russian-Made? Vladimir Nesterenko, Director General of Niarmedik Group Niarmedic Group Established 26 years ago by scientists of the Gamaleya Scientific and Research Institute of Epidemiology and Microbiology, the company introduces advanced diagnostic test systems in broad medical practices for laboratory diagnosis of the most significant infectious diseases threats such as STDs, HIV, viral hepatices, TORCH infections, etc. DNA tests make another important field of the company s activities. The project has been supported by the Russian Ministry of Industry and Trade and will be partly financed by the Industry Development Foundation. The Russian economy needs a production facility of DNA tests as 98% of the products offered in that fields are foreign-made. As it reaches it full capacity in 2017, the plant of DNA tests will completely phase out similar foreign made products. The opening of Niarmedic Pharma in Obninsk Industrial Park has obviously been one of highlights in the year 2015 for Niarmedic Group. The 22,000 m 2 facility houses advanced fully standardized equipment. The plant design complies with all international quality standards of manufacture and laboratory practices. Niarmedic Pharma will be manufacturing Kagotsel, a popular antiviral medicine. In Niarmedic conducted jointly with the International Society of Internal Medicine, the Clinical Trials Support League and the Eurasian Society of Infection Specialists a unique analysis of 14,000 patients who received treatment of a common cold and flu in outpatient departments of 202 medical centers in various countries. The analysis has once again demonstrated the efficacy and safety of Kagotsel irrespective of when its administration begins. As a result, the company is prepared to offer the medicine to customers abroad, too, now that foreign health care specialists are aware of the efficacy of this unique Russian-made medicine. Niarmedic is intending to launch yet another unique project in the near future: construction of a full cycle production facility, which will be the first in Russia to manufacture acting agents for genetic identification of people and establishment of family ties. The project has been approved by the Expert Council of the Industry Development Foundation operating under the Russian Ministry of Industry and Trade and has been put on the list of plants, which will be phasing out imported products. Today foreign-made products account for 99% of the products offered in this field. Niarmedic is capable of changing that. According to experts, the new facility will help to phase out foreign-made products in this field by reducing their share down to 20% in The construction is scheduled to be launched in Niarmedic is intending to launch yet another unique project in the near future: construction of a full cycle production facility, which will be the first in Russia to manufacture acting agents for genetic identification of people and establishment of family ties. 41

42 automotive cluster Automotive Digest In September 2015 a VW engine plant was opened. A gasoline 1.6 MPI (EA211) engine was the first engine to roll off the assembly line. According to Chairman of the Russian Government, Dmitry Medvedev, who attended the opening ceremony, these are large investments and it is the first time that a foreign company localizes its engine production in Russia. Our relationship with Volkswagen can stand any adverse developments and we value the cooperation a lot. In October of 2015 truck production was resumed at the plant of Volvo in Kaluga. Late in September production of Volvo and Renault truck cabins had been launched. Peter Andersson, Director General of Volvo Group in Russia, said the following we keep receiving new orders for our plant in Kaluga, the business is developing well at the car plant, cabin plant and at Volvo Construction Equipment. Customers are showing a strong interest in trucks made in Kaluga In November 2015 VW Polo sedans got a 1.6 l engine made in Kaluga. The new engines have a higher capacity compared with former generation engines reaching 90 and 110 hp. Their winter adaptation package has been expanded especially for the Russian market. Cold start has been made possible at -36ºC. One of the best selling cars in the Russian car market, VW Polo has received several updates, including multimedia systems and lighting equipment. Since May of 2015 VW Polo second generation cars have been on sale. In January 2016 the VW plant in Kaluga launched assembly of a new Polo Allstar model. The new model will be available for ordering at all VW dealers starting from January of The new model will help VW expand its market share and keep strengthening its positions in the Russian market. The car will be equipped with a VW 1.6 l (90 hp)engine with a 5-speed manual transmission or a 1.6 l (110 hp) engine with a 5-speed manual or 6-speed automatic transmission as the customer may prefer. A new color of Copper Orange will be available for the new car. 42

43 automotive cluster Georgy Rotov, Director General of Continental Kaluga In December 2015 the automotive cluster in Kaluga region received government support in the amount of RUR million. The Russian Ministry of Industry and Trade completed the process of granting subsidies to the management companies of Russian industrial and technology parks from the federal budget in According to the requirements of Regulation No. 831 of the Russian Government and the agreements made by the ministry a decision was taken to allocate funds to the management companies of industrial and technology parks in the amount of RUR 252 million. The government support was granted to 11 parks in 10 Russian regions. Automotive Cluster in Kaluga 3 OEMs includes 27 manufacturers of automotive components None of the cluster s plants suspended its operations in Moreover, the car manufacturers have declared their intentions to raise their car manufacture localization in the region significantly and the manufacturers of automotive components are reviewing opportunities to expand their presence in the Russian and global markets. Swiftly changing, business conditions make new opportunities more prominent. In 2015 we made a significant progress towards more efficiency in our internal processes. Despite the dropping demand in the Russian market, we doubled our output compared with 2014 manufacturing 2 million tires in That was made possible among other things by a growing demand in other markets. In April of 2015 we started to export our products. In the past year tires manufactured at our plant in Kaluga were shipped to 15 European countries, former Soviet republics and Asian countries. The exports accounted for over 20% of the plant s output. In 2016 we intend to raise our exports. Currently we are looking at potential supplies to China. In the current situation, prompt and flexible response to market developments is of pivotal importance. We also work to expand the plant s product range. In 2015 our product range doubled, too, to include to 18 inch tires distributed over three brands (Continental, Gislaved and Matador). In 2016, the launch of large-scale production of 20 inch tires is on the schedule. In addition, in 2015 we managed to start the production of winter studded tire IceContact 2, the latest development of Continental, which are manufactured at two plants of the company only: in Kaluga and Korbach (Germany). The year 2015 was also marked by a launch to direct supplies of our tires to the assembly lines of car plants. We now cooperate with 5 plants and intend to keep exploring this field of activities. In 2016, we are expecting a growth of demand for the products of Kaluga plants in foreign markets. We will be expanding further our product range. Our team is key to our success. Our staff members keep improving every day as they value the opportunity to work in our company and are striving to develop together with the plant. Several important organizational changes took place in 2015: employees who were at the plant since the opening have been promoted within the organization. Importantly, the plant has staff members who can not only work at the required level but improve as well. This year the company will keep offering the same social guarantees as previously, including sports activities, subsidized living accommodations, meals and traveling to/from work. In addition, Continental raised the salaries of its employees by more than 10%. I am confident that together we will be able to achieve the expected results as we have always done! 43

44 Agricultural Cluster Agricultural Cluster: Key Figures st 1st agricultural companies farms food and food processing companies in Central Federal District in terms of milk production growth, % in Russia in terms of gross production growth (in relative terms) RUR 41,2 billion in investments in the agriculture in Kaluga region since 2004 RUR 2,7 billion in investment growth in 2015 RUR 36,7 billion value of gross agricultural product in all kinds of farms in launched their operations in 2015 in various fields of activities Dairy Farming Beef Farming Fish Farming robots implemented at 27 farms 27% growth of beef cattle units 780 tons of fish bred in 2015 family cattle farms received a grant of up to RUR 10 million winners of the Farmer Starters Program received a grant of up to RUR 1.5 million Crop Farming A grant is a free subsidy provided in money or in kind with a requirement to report on the spending. The government program of support to farmer starters has been in effect since The program is aimed to promote the development of branches important to the region: milk, beef, poultry, rabbit, bee and crop farming. 30% potato production growth in ha of greenhouses put into operation for crop growth 500 ha of restored gardens 44

45 Agricultural Cluster 156 farms operating in various branches received grants since 2012 in the total amount of RUR 424 million 44 small businesses operating in agriculture received loans from the Entrepreneurship Support Foundation in the amount of RUR 91 million 38,8% production growth at farms in Kaluga region 13 robotic dairy farms 5 beef farms launched their operations in Kaluga region Proud! Events in 2015 In February Agro-Produkt LLC was registered in Kaluga region. The company will set up a 25 ha greenhouse complex for crop breeding, mainly tomatoes and cucumbers. Expected investments will exceed RUR 6 billion.; In August Bryansk Meat Production Company, a company of Miratorg Agricultural Holding, have brought Aberdeen- Angus breeding stock to Alekseevka, which will be the first cattle breeder built in Kaluga region under this investment project. In total, 8 farms will be put into operation and 6 districts of the region. The project s costs are RUR 6 billion. In September a large pig breeding complex was opened in Maloyaroslavets District. The complex will be equipped with advanced equipment and new technologies. Over 30 new jobs have been created. Investment in the project exceeded EUR 9 million. In addition, the company received federal and regional government support in the amount of RUR 108 million and loans in the amount of RUR 376 million. In October a new incubator was put into operation at Kaluzhskaya Poultry Plant. The investments into the reconstruction amounted to RUR 168 million. With the new equipment from Belgium, the incubator will produce up to 27 million chickens per year. The company s own eggs account for 80% of the feeds of the incubator. In November the second stage of Eko Niva APK s robotic complex was put into operation. One of the largest in Russia, the complex has 32 robots installed in its three cow barns, a maternity barn and young stock area. The farms are house to 2,000 cows. The investments in the project are estimated at RUR 992 million. In November a new sheep farm was opened in Maloyaroslavets District. The owner received a grant in the amount of RUR 905,000 under the program of support to farmer starters and used the money to set up sheep breeding operations. In December a stone laying ceremony was held of a rabbit farm of Ms Vysotskaya (an individual entrepreneur). A farm is expected to be set up with a capacity of 1,083 doe rabbits and an automatic feeding function. Capital investments will exceed RUR 40 million. Looking back on the year 2015 I am happy to say that the region s agriculture had done a great job. That can be accounted for by the following three factors: highly efficient work by our agricultural workers, significant federal and regional government support and, finally, investments. I would like to thank all stakeholders for their contribution to the development of the agriculture of Kaluga region. Leonid Gromov, Minister of Agriculture of Kaluga Region 45

46 Agricultural Cluster Business Support Afield Agriculture Development Agency of Kaluga Region Key Activities Has been operating under the ministry of agriculture since July of developed business plans Finding contactors for investment projects 4 Technological support Development and financing of projects 5 Consulting on the available project government support Information support of the agricultural business Stefan Perevalov, Director General of the Agriculture Development Agency of Kaluga Region 38 received grants document packages collected for subsidy requests approved loans 14 selected sites 13 farms receiving technological support Ilya Vepritsky, Winner of the Farmer Starter Contest The team of the Agriculture Development Agency helped collect all the documents required for the participation in the contest: certificates, documents from the tax inspectorate and the Pension Fund and develop a business plan. They have done a great job and I only needed to visit Kaluga few times. All issues that needed to be settled were settled by phone or . In Kaluga region a special focus is placed on the development of the agricultural industry. In addition to financial help from the government in the form of grants and subsidies, a specialized agency has been set up to offer help to agricultural businesses: the Agriculture Development Agency of Kaluga Region. Our goal is to offer support to a potential investor or farmer on various kinds of issues, ranging from finding a suitable location to offering coverage of a successfully implemented project in the mass media, on the basis of the one stop shop principle. Lately, small and medium-sized business have been demonstrating a growing demand for our services. 46

47 Innovative Agricultural Machinery to be Produced in Kaluga Special Economic Zone On 14 January 2016 мan agreement was made between the government of Kaluga region and KalugaSelMash LLC on the construction of a production facility of mobile grain drying facilities. Unique in Russia, the plant will be the first innovative plant of mobile grain drying facilities, which will help achieve the following goals: reduce grain costs, reduce equipment purchase costs, reduce grain losses by 20% to 30% and manufacture products able to phase out foreign-made products and having an export potential. The investments will reach about RUR 300 million. The project is expected to be implemented in The plant will be manufacturing mobile grain drying facilities operating on various fuels, such as gasoline, diesel, heavy oil, etc., with a capacity of up to 570 t grain per day. The products will be sold in Russia and the countries of the Customs Union. The parties have reached a preliminary agreement to set up the plant in Kaluga Special Economic Zone. The manufacturer selected a 2 ha lot in Ludinovo Lot. Localization will be reaching 80%. This year an assembly line will be set up at Lyudinovo Machine-Building Plant with a localization of at least 40%. In 2017 a plant will be constructed manufacturing a wide range of products such as mobile and stationary grain drying facilities, grain storage systems, etc. Kaluga Special Economic Zone Located over two lots in Lyudinovo and Borovsk sites and the nearest industrial site of that kind to Moscow 1,042 ha Area The Special Economic Zone offers the same regional advantages as are in effect in the region s other industrial parks, such as access to the engineering, transportation and business infrastructure. The advantages of the special economic zone also include federal and regional tax benefits and customs preferences. 47

48 Anniversary Galanthus & K: Wide Interests First tulips planted on the Right Bank 15 years ago, Galanthus & K is celebrating its anniversary We talked to Director General of Galanthus & K, Oleg Mitrofanov, on how to make a floral business a success. European Quality In 2011 we made an agreement with IKEA. Galanthus & K is one of flower suppliers of IKEA stores in the run up to 8 March. At all of its stores, either in Moscow, Nizhny Novgorod, Kazan or Novosibirsk, bunches of flowers are sold at a fixed acceptable price. That attracts lots of customers to IKEA stores. Economically, we get few benefits here. Large as it is, IKEA is a discounter, and the benefits of our cooperation with lie elsewhere. IKEA is a European company with rigid supplier requirements. We go through annual audit checks and operate in compliance with environmental standards, e.g. we pack our flowers only in environmentally friendly foil. All the staff members of Galanthus & K have an understanding that they work in a Russian company with strict European standards. We are striving to keep improving, which is crucial for the development. Efficiency In order to minimize costs we have decided to invest into modernization of our capacities. We bought the key line in Holland while the rest of the equipment supplying flowers from the flowerbeds, though similar to Dutch equipment, was developed by ourselves. All the improvements are our knowhow! We have modernized our greenhouses. We use only drip watering and hydroponic solutions. We have purchased packaging lines and managed to cut our manual labor by 60%. Previously it took 10 to 15 people to take care of a 1 ha lot, now 5 people suffice. Flowers per ha remained unchanged at 5 million per year. In terms of efficiency, Galanthus & K is reaching the level of advanced greenhouse complexes. 5 million flowers and young plants per year 500,000 trees and bushes per year 5 flower shops in Kaluga 48

49 Anniversary Development Galanthus & K has a rather small area, including a 1 ha protected lot and a 1 ha open lot, which undergoes intensive development. Mother plants have been planted for apple, pear, plum, cherry and ephedra trees. We graft, inoculate, put our plants in containers and sell them. Today we have our own planting materials of about 10,000 rooted plants. Over 2 to 3 years we will be able to fully phase out imported products. Obviously, a modern trading site has become a necessity. In 2015 we laid the foundation of a new garden center, which is expected to be opened this year. The 1,000 m2 garden center will be selling virtually everything, from indoor plants and various kinds of soil and fertilizers to festive decorative items. In summer time the garden center will be selling young plants. Daily we grow up to 1,000,000 young plants. Lilies have been me the specialist I am now. I do not read them as an open book though, there are still a couple of pages left to be read. Mission This year Galanthus & K will jointly with the regional Philarmonic Society implement a large project to decorate the public garden near the Concert Hall. The idea behind this project is to set up a botanical mini-garden for family fun. The garden will include our regional plants such as shrubs, fir- and broadleaved trees. In autumn we will be planting tulips. That will be the first project of the kind both for us and Kaluga region. Hopefully it will be a success. Children who love plants will keep loving them for the rest of their life. We have accumulated some experience in performing the awareness function. Development and education of our staff members is one of the goals of our company. People in Kaluga like gardening and enjoy visiting Botanik Club at Galanthus & K, which have been open for the past four years. Every Saturday we hold free tours of locals, master classes, workshops and other events, such as the day of lilies, irises, cucumbers, etc. We enjoy telling people about various breeds, breeds that are worth buying, share care tips, etc. Those activities are very important as they help promote our business. Partners Recently I have visited the IPM Essen-2016 horticultural trade fair. I was amazed at its scale. Obviously, the larger the exhibition, the more contracting opportunities are available. We have acquired new partners, primarily suppliers of planting materials. Direct supplies without intermediaries are always more efficient. We are currently thinking percentages. As banks offer loans at 19%, we need to find out how we can reduce our costs for the same amount. So far we have five suppliers from Holland, Germany and Denmark. Those are the most advanced horticultural countries. Flower shops: In Kaluga: 94, Lenina St., 37a, Lenina St.; 13, General Popov St., 6a, Vishnevskogo St.; 10, Tsentralnaya St. Vorotynsk Flower Market, Garden Center and Plant Nursery: at 2a, Energetikov St. 49

50 High Potential Projects Tekhnologiya to Develop PD-10 Aircraft Engine The relevant proposal was first voiced at a meeting of the managers of Tekhnologiya and the United Aircraft Corporation, also attended by representatives of NPO Saturn and Aviadvigatel Plant from Perm. After the parties have had a tour of Tekhnologiya s production facility in Obninsk, they looked at the opportunities of potential cooperation as regards the development of a family of high potential jet engines. Currently Tekhnologyia manufactures SaM-146 liners, nacell thrust reverser buckets, core engine panels and liners of PD-14 engines. According to the Tekhnologiya s General Designer, Oleg Komissar, the company has made consistent efforts to develop new-generation PCMs for aircraft engines and the offer to participate in the development of the PD-10 engine, which will be put on SSJ-100 jets, is definitely of interest to the company. Projects, which can be implemented together with the United Aircraft Corporation, will contribute significantly to more competitiveness of Russian aircraft engines. Joint Solution by Panasonic and Kraftway In May of 2015 Kraftway from Russia and Panasonic from Japan presented a joint solution in the market: modified semi-rugged Toughbook CF-54 with integrated Kraftway s hardware and integrated software options providing for cyber security of the whole system. Kraftway became the first Russian company that integrated its hardand software in Toughbook CF-54. The cooperation, which started only a year ago, turned into efficient efforts to implement a project for one of the strategic customers in the government sector. Engineers and programmers completed the integration within a very short period of time. The solution provides reliable protection of data and business processes, a requirement that needs to be met by users of protected devices with large government and commercial structures, which are subject to the law on information. In terms of its dimensions and weight (1.9 kg), Toughbook can be compared with a usual office laptop, however, it is more rugged as it has received a IP-51 antidust and anti-spill level 50

51 перспективные проекты Tandetron, Russianmade charged particles accelerator, put into operation in Obninsk In December the specialists of the Leypunovksy Institute of Physics and Power Engineering launched a charged particles accelerator Tandetron, unique in Russia and best globally in its class. The unit generates all kinds of accelerated ions, from hydrogen to gold. The new accelerator will be applied in various branches of science and industry. In the field of nuclear energy the accelerator will be used to conduct fundamental and applied research and to test new technologies. In industry the unit will promote the development of materials for micro- and nanoelectronics. It will also help improve distanced neural therapies of radioresistant malignant tumors. ВЕСТНИК 51

52 Opinion Cast-Iron Arguments from Obninsk Steel Project The key field of activities of Obninsk Steel Project is designing complete steel buildings an structures. The company s specialists not only make estimates and develop a design, but act as a technical customer, too, monitoring the quality of works at all project stages. With this comprehensive approach, the company managed to implement over 300 projects over the past 4 years. The projects of Obninsk Steel Project are located not only in Russia, but also in Kazakhstan, Belarus and France. German partners implementing investment projects in the region value the accuracy of the company s estimates. Selecting a contractor You would like to construct a building. You have made all the choices as regards its purpose and sizes. Now you have got to decide who is going to implement the project, i.e. to develop a design and to construct the building. Many customers follow the path of least resistance by choosing a general contractor and wait self-contentedly when the building is built without interfering in the implementation. That is a bad decision. Experience has shown that many general contractors do not attempt to minimize the costs, quite on the contrary. Mistake 1 Nikolay Botin, Director General of Obninsk Steel Project LLC We can help you save up to millions in construction costs. We would like to see more useful steel buildings, which have been efficiently built moneywise. What is so difficult? You collect all offers, pick the cheapest one and start saving money. It is not that straightforward. Picking the offer with the lowest price is the easiest but not the most efficient way to save on costs. Such approach can, instead of reaching the desired results, lead to even more costs. An analysis of the information we receive has demonstrated that such a superficial approach to project implementations is common for both government and private implementations. Some people avoid delving into the implementation due to a lack of willingness, others due to a lack of knowledge and yet others believe that they are dealing with professionals. We would like to show you a good manner of saving on project implementation costs. Your feedback is welcome at Not interfere in the implementation. Keep monitoring the implementation closely, verify and analyze the information you receive. What s the Price? Answer the following question: How has the general contractor estimated the project costs? The costs of outer structures can be estimated. And what about the frames? Exactly, no estimates can be made without any design documentation. Detailed estimates can only be made after the design has been developed. That is where the most common mistake is made. The contractor needs to be chosen very thoroughly. How do you make the choice? Based on costs estimates? You might select the cheapest designer saving e.g. RUR 500,000 on the project costs. You believe you have made a good choice. However, any job obviously has a price. You cannot buy a loaf of bread at RUR 5 where its costs are RUR 10. A price declared at a level lower than the market value indicates either that the estimates have been made inaccurately or that the quality of the product is about to drop. It gets increasingly interesting here. For example, you have received a design from the designer, which at the first sight seems to be OK. But is everything as good as it seems? 52

53 Opinion Timelines At every other construction site timelines are not observed and the estimated costs go up. What is the reason? Constant negotiations on the costs of production and works. A production cost reduced to the minimum can turn our badly for you. A plant supplying high quality and having a tested technology, an attested laboratory and quality control cannot come up with a price of a semiprofessional company. Such plant will have overhead costs higher than that. Forcing a plant to work at the level of the production cost, you must understand that even a minor mistake can lead to high expenses, idle times and fines. Example An example will make it clearer here. Recently we have received a design of a maintenance depot for the well-known trains from St.-Petersburg. The building had dimensions of 42x300 m. The design weight of the frames was 1,130 t. Rubbing his hands, the general contractor will say that the metal frames cost RUR 79,100,000, assembly costs RUR 22,600,000, etc. What would many customers do in this situation? Exactly, try to get down on the price by declaring tenders and exercising pressure on the plants. It was a stroke of luck for the customer that we received the design on time. An analysis has shown that the frames were designed not quite efficiently, to put it mildly. We convinced the customer to get another design of the frames. For the results, see below Building of 42x300 m Previous design New design Weight (t) 1, Frames production costs Frames assembly costs Savings 79,100,000 40,180,000 38,920,000 22,600,000 11,480,000 11,120,000 Mistake 3 Chasing the lowest price. Select the best cost-benefit ratio. Consult professionals. We have accumulated an extensive knowledge on most problems, which can arise in the course of a project implementation. Our company cooperates with many manufacturers of metal structures. We know what their capacities are and our technical specialists offer their consulting services to them every now and then by conducting a technical audit or performing the function of a technical customer. All that helps make the right choice of a supplier of metal constructions and prevent any potential financial and time losses. Tips Requesting a design of metal structures, select the plant right away, your design will then be developed based on the plant s capacities and no approvals and replacements will be needed. If you decide to request the related documentation from the same designer, you will be able to receive the requested materials earlier and to save about RUR 700 on 1 t of metal structures. With modern software, the designers will be able to come up with a draft of the documentation sooner as they will have a finished model of the frames available. If you request the documents at the plant based on the develop design, the plant s designers will have first to make the model of the frames again and that costs time and money. Total savings 50,040,000 What would you think of savings in the amount of RUR 50,000,000? And those are only savings on the production costs of the frames and the assembly costs? Savings on the costs of the ground work can potentially be added up here. Some would be skeptical saying we made incorrect estimates. But that is not true as the project has already been approved by the Russian Glavgosexpertiza. Mistake 2 1. Make sure you are aware of everything and monitor everything. 2. Focus on the selection of the designer, request preliminary estimates of the weight of the frames, select the structural elements and modern materials. A good design will save you costs. 3. Select the plant based on the quality and not the price of its products. Visit the plant yourself or ask one of your specialists to do that. 4. Order the design package from one designer. That will help you save on time and the costs of the design. 5. If you do not have the time or the knowledge to monitor the project implementation, ask a professional company to do that for you. A lack of interest and knowledge of the process. Select the designers very thoroughly, ask questions, most importantly, on the weight of the frames. If the designer fails to come up with a figure within 2 days, start searching for another one. Obninsk Steel Project +7 (48458) (48439) (910) info@obninsksteel.pro 53

54 Construction Khoroshy Residential Compound Place of Attraction in the Right Bank In 2015 residential properties with a total area of 800,000 m 2 were put into operation in Kaluga region. In Kaluga only residential properties with a total are of 350,000 m 2 were built, which is 52% more than in Most comfortable new-generation residential compounds are built on the Right Bank. One of the key projects of Greater Kaluga, Khoroshy Residential Compound is implemented by Right Bank Construction Company, a company of the Moscow Industrial Bank Holding, which is actively involved in the financing of real estate projects, including the construction of compounds in 56 Russian regions. We talked to Bulat Kerimov, Director General of Right Bank Construction Company, about the project implementation stages in Kaluga. Financing the construction of compounds in 56 Russian regions is an ambitious project of Moscow Industrial Bank. How did you select regions for construction? We had a whole range of criteria where the pace of the region s social and economic development was evidently the key criterion. The faster a region is developing, the higher requirements to their standards of living people have and the higher the demand is for high-quality housing. A quite unique region, Kaluga region opens new plants and people from various regions would like to live and work here. Judge for yourself, today 16 developers are active on the right bank. Housing is built at an unprecedented rate, but the demand keeps growing. Obviously, with so many offers, buyers are fought for. In this fight the company with the best offer wins. I am confident that competition will list the Russian construction industry to a whole new level. What are, in your opinion, the key advantages of Khoroshy Residential Compound? The holding Right Bank Construction Company makes part of comprises several plants, including manufacturers of metal structures and CBPBs. We manufacture the key construction materials ourselves and do not have to buy them reducing the construction costs significantly. Ready construction arrive in Kaluga where they get assembled and concreted at the construction site. Concrete is supplied by plants in Kaluga region only. The assemble works are conducted by people from Kaluga region, too. We trained over 300 people, who currently are employed by CU-40, which has been set up specially for this project. The walling technology is yet another advantage. Unique, the technology has been applied in Kaluga for the first time. A stay-in-place form is filled up with high-quality concrete. As a result, the flats have straight inner walls and buyers do not have to straighten them any more as it is usually the case and 54

55 Construction save on the costs of decoration. With this technology, the flats in the compound have a height of 2.90 m. It is comment knowledge that the higher the ceiling is, the better the microclimate is in the flat. Our offer provides for individual planning solutions, too. Each bloc of flats in the compound has a different planning, but all th planning options are made based on modern trends. Even the smallest studio with a total area of 37 m2 has a spacious recessed balcony and panoramic windows. The heating technology is unique, too, due to its individual character. The single boiling room supplies warmth to the bloc of flats. However each flat in Khoroshy has an individual warmth meter and a heating regulator. That is both convenient and cost effective. As regards comfortable living, I would like to say here that the compound is constructed in compliance with the new norms requiring 30% larger areas around the flats. Resting places, playgrounds, sports grounds, bicycle tracks and table for all-the-yearround ping pong will be made here. Basketball and volleyball courts will be ready in spring. In addition, multi-tier parking facilities will be constructed in the compound The location of the compound is another key advantage. Pure nature, woodlands, the Oka river and beautiful vistas all that is combined with an ease of travel, shops, daycare centers for children, sports, cultural and educational centers, a developed trade and service infrastructure. The compound is developing fastly and, I am confident, is to become a place of attraction on the right bank. We are making every effort possible to make living here pleasant. I take the initiative myself sometimes and propose solutions for some issues. A good example here is the construction of a road from the Generala Popova St. to the village of Shopino. The need of the road was evident. I held a general meeting of the developers and the department of construction. At the meeting we decided to break up the road in stretches and each of the developers paid for the construction of their stretch. Now we are maintaining the road jointly. Speaking of the infrastructural development of the right bank, the compound has one school, which offers lessons in three shifts. Since the social responsibility of your company is a common knowledge, the city administration approached you with a request to build another school. Has the decision on the construction already been taken? Absolutely, we will be both constructing the school and financing the construction. The city administration is currently working in this field. Hopefully we will be able to construct the school soon as the compound is in a real need of another school. Last year your company jointly with the city department of education launched an initiative called the Chase Race of Kindness. What is this initiative about, how will it be implemented and will it receive a follow-up? I am confident that projects of this kind are of crucial importance now and for that reason we will set it forth this year. The initiative boils down to a simple thing of doing something good. It does not matter what as good things cannot be small. Giving up your seat in a trolleybus, bringing someone across the street and helping parents or neighbors Tell about it in one of the social networks. Users will evaluate it and the winners will receive a free trip to Eksperimentanium in Moscow. The principle of the initiative is very simple, for all information go to our website. Currently children from three schools in Kaluga participate in it. I would be happy if the initiative transforms into a city movement and everyone, irrespective of his or her age or social position can help make life better. Khoroshy Residential Compound is built around the 650th Anniversary of Kaluga Square in the middle of the right bank area. The project includes construction of to 16- storied blocs of flats with a modern infrastructure, which will include 7-tier parking facilities. The ground stories of the blocs of flats will be occupied by social establishments and shops. In February 2016 two blocs of flats were commissioned and yet another bloc of flat is scheduled for completion in March of In total 3 blocs of flats will be built this year. All the blocs of flats are built as metal frames with monolith walls and floor structures. The structure is rigid and stable due to carrying walls, pillars and slabs with interflooring disks. The ventilated ceramic façade is well insulated and covered with ceramic tiles. The flats have reinforced plastic windows with triple-pane glass. The heating system and electrotechnical works have been fully completed. The engineering systems comply fully with modern requirements: water and warmth meters are place outside the flats, power meters are placed in separate boxes. Internal walls are made of plaster wall boards, which provide for good noise isolation and are suitable for re-planning activities. The project is implemented jointly with Moscow Industrial Bank. For the customers of Right Bank Construction Company, the mortgage rate has been established at a low level. In 2015, Khoroshy Residential Compound won at the Market Leaders Award in the category Opening of the Year. «ЗАО СК «Правый Берег» Tel

56 New Aviation Transport and Logistics Cluster in Kaluga Region 22 January 2016 governor Anatoly Artamonov of Kaluga region announced the region s plans to set up a system of commercial and cargo carriage by air, which will be operating based on an aviation transport and logistics cluster. The cluster will be set up based on Kaluga International Airport and Ermolino Airport. The region s administration is currently looking at possibilities to breathe new life into the flight school in Kaluga, which will be offering training for the specialists of the cluster and will make part of it. As regards the potential of further development of the transport and logistics infrastructure, the governor stressed that despite the current difficulties the project has all it takes to become a success. This project has a high potential for the region. We constructed Kaluga Airport at hard times and expect more synergy and development opportunities after it has been brought together with Ermolino Airport. Chinese Investors To Participate in the Reconstruction of Ermolino Airport 16 October 2015 the government of Kaluga region and the Chinese Railway Construction Company signed a memorandum on intentions in Harbin regarding implementation of an investment project on the construction of Ermolino International Airport. The cooperation will be based on the available experience of cooperation between Russia and China and the strategic value of this project for both the region and Russia. The details of the investment project are worked on now. To that end, a joint working group has been set up.

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