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Oboronprom United Industrial Corporation

The united industrial corporation Oboronprom (part of the state corporation Rostek) ceased to exist in early 2018. The company had fulfilled its task, after which its continued existence was considered inexpedient. The company was engaged in the consolidation of helicopter and engine building assets, and fulfilled its task. Helicopters of Russia and the United Engine Building Corporation (UDK) - will be transferred to the direct management of Rostek in 2018.

Oboronprom engaged in the merger of enterprises that competed with each other in the domestic market, under the leadership of one management company. The same work was done in the part of engine building. The former head of "Oboronproma" Andrey Reus told "Kommersant" in an interview "We collected the entire intellectual and production resource of the industry, the enterprises ceased to fight among themselves and began to work in world markets."

The joint industrial corporation Oboronprom incorporated in Rostek was liquidated in Janaury 2018, once the documents for the tax authorities were ready. The liquidation procedure will be completed within a month, the relevant documents for the tax authorities are ready. The process went on in stages, for several years, Rostec said. They clarified that during this time, many employees of the company were invited to move to work in the organization of the state corporation, including its head structure.

OPK Oboronprom was established in 2002. Engaged in trade and supply of military products and services, in particular, spare parts, as well as maintenance and repair of previously supplied military helicopter equipment, including foreign markets. In 2004-2010, the helicopter industry was consolidated on the basis of the corporation, and since 2010 Oboronprom has received controlling stakes in more than 80% of engine manufacturing enterprises in Russia.

Oboronprom Corporation was one of the largest Russian diversified industrial-investment groups in the engineering and high technologies sectors. Oboronprom was an industrial investment group set up in 2002. Oboronprom has been employed by the Russian state as a vehicle for the consolidation of, initially, the helicopter design and production sectors and, following this, the electronic warfare and aviation engine sectors. As a result, acquisitions have been at the core of the group's development and growth.

The Russian Federation holds a 51% stake in Oboronprom; its other shareholders are Rosoboronexport (31.13%), the Republic of Tatarstan (15.07%) and Rostvertol (2.79%). The enterprises of the Corporation produced goods and provided services worth over $1.5 billion in 2007. Over 80 thousand people work for the Corporation's enterprises from Moscow to the Far East. Oboronprom was de-facto run by the state arms intermediary Rosoboronexport (ROE). The Board of Directors of the OBORONPROM Corporation was chaired by Sergey Chemezov, General Director of Russian Technologies State Corporation.

OBORONPROM United Industrial Corporation (OPK Oboronprom) was formed in 2002 as a closed joint-stock company on a parity basis with Rosoboronexport State Corporation and State Investment Corporation (Gosincor). After Gosincor liquidation in 2003, its share in the Corporation was transferred to the Federal Agency of Federal Property Management, and the Corporation was reorganized into an open joint-stock company. The paid-up authorized capital of the OBORONPROM Corporation was RUB 4.304 bln. Pursuant to Presedental decree the OBORONPROM Corporation was put in the list of Russian strategic enterprises. Pursuant to Executive Order of the RF President the Corporation was also included into the list of enterprises entitled to foreign trade activity related to defence products, namely supply of spare parts, maintenance and repair of military equipment previously delivered.

Pursuant to the Decree of the President of the Russian Federation of November 29, 2004 and the Government resolution of May 6, 2005, the Corporation was the parent (management and holding) company of a helicopter group, with 51% interest in the Corporation held by the Federal authorities. The Corporation holds a more then 75% stake in Oboronitelnye Sistemy (Defence Systems), the parent company and the core entity of International Financial Industrial Group Defence Systems. The Corporation also holds a 56% interest in Oboronpromlizing (Oboronpromleasing).

Russian Helicopters, Oboronprom's helicopter manufacturing group, was the leading Russian designer and manufacturer of rotary-wing aircraft equipment. Oboronprom was creating an engine building holding that will be the leading Russian industrial group producing engines for aircraft and gas compression stations. Oboronitelnye Sistemy, a subsidiary of the Corporation, was the sole Russian producer of the unique Pechora-2M air defence missile system.

Several of Russia's largest engine manufacturers became part of the Oboronprom united industrial corporation, according to a decree signed by Russian president Vladimir Putin in April 2008. The Russian Federation will contribute to Oboronprom's state capital stakes in ten companies. It received 37% of the Saturn research-industrial company, 14.25% of Perm Motors, 45.03% of Aviadvigatel firm, 60% Star plant, and 14.95% of Inkar company - all of which are based in Perm. It also received stakes in several Samara based companies; 38% of Motorostroitel, 60% of the Kuznetsov Research and Technical Complex, 50% of the Samara Design Bureau of Machine-Building, 25.66% of Metallist-Samara and 38% of the Volga Aviation Technological Institute.

The Ufa-based Motor research-industrial center was transformed into a joint-stock company, and 100% of the company subsequently was transferred to Oboronprom. Also under the decree, the Engine-Building Corporation Management Company (UK ODK), a 100%-owned subsidiary of Oboronprom, was set up and held a stake of 50% plus one share in the Motor research-industrial center. UK ODK will focus on organizing serial production, modernization and maintenance of modern aviation and rocket engines, developing gas turbine engine production, attracting intellectual, industrial and financial resources for the introduction of new technologies and international standards. A total of 49% of the Kamov aircraft-building company and 3.9% of Rostvertol will also be merged into Oboronprom's stock capital.

The first talk about the liquidation of Oboronprom appeared in 2013: then it was reported that the corporation would cease to exist by 2022. According to the top manager of one of the helicopter manufacturing enterprises, it was already clear then that "it is impossible to collect the assets of the two industries indefinitely": "Now helicopter and engine building can develop without any involvement of Oboronprom, the management of Russian Helicopters and UDK already used to solve all current issues without intermediaries ".

Corporation "Oboronprom" was to be be liquidated in the second half of 2016. "Russian Helicopters" United Engine Corporation (UEC) and "Stankoprom" will go under the direct supervision "Rostec." According to a report on the federal portal of draft regulations, the elimination of "Oboronprom" would happen in the first half of the year.

This event ws not unexpected. The head of "Rostec" Sergey Chemezov had long had the idea to abolish the "Oboronprom", though he was going to do it only in 2022, as told reporters at the MAKS-2013. In particular, he noted the very difficult financial situation in the UEC. If the DCS had focused exclusively on the implementation of projects in the field of military aviation and abandoned ambitions on the civilian market, it would require state support in the amount of 50 billion rubles. If the DCS has focused on "a maximum portfolio" on the military and civil markets, then it would take no less than 180 billion rubles of state support.

By 2016 there was no money for these projects. The explanatory note to the draft resolution of the Government of the Russian Federation "On Amending the RF State Program" Development of the aviation industry in the years 2013-2025, "noted that the budgetary allocations account for 52 billion rubles., Which was less than required for the state alone UEC. Of these, 52 billion for the implementation of the subprogram "Aircraft" allocated more than 26 billion rubles., Subprogram "Helicopter" - more than 4 billion rubles., Subprogram "aviation engine" - about 8 billion rubles. Apparently insurmountable financial difficulties and have become a major cause of premature liquidation "Oboronprom".




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