GAZ Group Annual Report 2008

Transcription

Annual Report
2008
GAZ Group
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Contents
Statement of the Chairman of the Management Board ........................................................................ 3
GAZ Group general information .......................................................................................................... 5
GAZ Group profile ........................................................................................................................... 5
GAZ Group mission and strategy..................................................................................................... 7
Organizational structure ................................................................................................................... 9
Key events of 2008 ......................................................................................................................... 10
Key events of the beginning of 2009.............................................................................................. 17
Main lines of business ........................................................................................................................ 19
Light commercial vehicles (LCV) and medium commercial vehicles (MCV) .............................. 19
Buses............................................................................................................................................... 25
Trucks ............................................................................................................................................. 30
Construction equipment.................................................................................................................. 33
Passenger cars................................................................................................................................. 37
Powertrains ..................................................................................................................................... 38
Auto components............................................................................................................................ 43
Corporate governance......................................................................................................................... 46
GAZ Group’s corporate governance system .................................................................................. 46
Board of Directors .......................................................................................................................... 47
Remuneration ................................................................................................................................. 51
Committees of the Board of Directors............................................................................................ 52
Executive bodies............................................................................................................................. 53
System of internal controls ............................................................................................................. 58
Risk management ........................................................................................................................... 60
Report on the payment of declared (accrued) dividends on the company’s shares........................ 61
Equity capital...................................................................................................................................... 62
Sustainable development .................................................................................................................... 65
Quality control................................................................................................................................ 65
Environmental protection ............................................................................................................... 67
Employees ...................................................................................................................................... 71
Cooperation with the state authorities ............................................................................................ 75
Social responsibility to society ....................................................................................................... 76
Contact information............................................................................................................................ 79
Major transactions and interested-party transactions ......................................................................... 80
Major transactions approved by the Board of Directors of OAO GAZ in 2008 ............................ 80
Interested-party transactions approved by the Board of Directors of OAO GAZ in 2008............. 80
Appendix ............................................................................................................................................ 82
Consolidated financial statements for 2008.................................................................................... 82
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Statement of the Chairman of the Management Board
This reporting year was a pivotal one, both for the company and for the Russian automobile industry
as a whole. This period will go down in economics textbooks as an unprecedented stage when rapid
growth gave way to a dramatic fall in the market. In the fourth quarter of 2008, the effects of the
global financial crisis on the automobile industry in Russia and worldwide reached their zenith. The
sharp drop in activity in the main consumer sectors, the fall in solvent consumer demand, the lack of
access to credit, and the contraction of the market by up to 80% in some segments inevitably
affected the company’s financial performance in 2008. These factors reversed the positive trends
seen in the first half of the year, in which the revenues of GAZ Group grew by 20% compared to the
same period in 2007. For the year as a whole, consolidated revenues dropped by 7%, to 146 billion
roubles.
However, responding to this rapid deterioration in market conditions, we mobilized our forces to
significantly raise our business performance indicators. The results of the crisis management
program implemented by GAZ Group confirm that a crisis is not only a period of difficulty, but also
of new opportunities opening up for automobile manufacturers. This situation has spurred us to
improve our key profitability drivers: increasing worker productivity, reducing costs, streamlining
assets and the management system, deep cuts in management personnel, and changes to investment
policy.
GAZ Group was one of the first in the industry to implement a crisis management program. The
measures taken since October 2008 to reduce costs, cut inventories of production materials and
finished products, and streamline technological processes allowed us by the end of the year to adjust
the production process in line with changes to market demand, cut selling expenses by one third,
avoid a glut of inventory, and retain our workforce capacity. The government commission on
increasing economic stability declared the crisis management program of GAZ Group to be “one of
the most promising that we have looked at”.
The implementation of the crisis management program is based on the potential that the company
has built up over the previous years, including the results achieved in 2008. Over the past year, the
company continued its work to update its model range and expand the product line, which is
fundamental to the Group’s competitiveness in the longer term. In 2008 there started the projects of
GAZell with improved specifications and the development of the next-generation LCV GAZelle-3.
Production of an upgraded UMZ-4216 gasoline engine, used in GAZ Group light commercial
vehicles, began in 2008.
In 2008 GAZ Group rounded out its full line of buses of all classes and purposes. New models were
introduced to the market: the Real compact-class city bus, the KAVZ 4239 medium-size low-floor
bus, the GolAZ 6228.10 extra-large suburban bus, and Russia’s first hybrid full-size bus, the LiAZ
5292. In the road-construction equipment segment, the company introduced six new products: the
EK-20 wheeled excavator, the ET-20 tracked excavator, the ET-26i tracked transfer loader, the V140 front-end loader, the GS-25.11 grader, and the Asf-G-3-08 asphalt layer. The vehicles dispose
of imported components, have higher productivity, and improved cabin ergonomics.
Preparations were underway to begin mass production of new URAL off-road vehicles, equipped
with comfortable interiors that cede nothing to their Western competitors in terms of ergonomics.
The year 2008 saw the completion of a large-scale project – the construction of a new
manufacturing complex for passenger cars that meets global quality standards. The complex has the
capacity to produce about 100,000 vehicles per year. The flexibility of technological processes
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allows us to re-orient production to different vehicle platforms and different classes. Under
conditions of rising exchange rates and higher customs duties, the opportunity to organize the
assembly of automobiles within Russia at existing facilities becomes even more attractive to foreign
investors, with whom negotiations continue on joint automobile manufacturing projects.
In 2008 the products of GAZ Group enterprises received numerous prestigious awards, attesting to
consumer recognition of the advantages of our vehicles. The Real bus and the low-floor hybrid
LiAZ 5292 were recognized as the year’s best domestically manufactured city buses at the
International Automotive Transport Forum 2008 in Moscow. The Ural-6563 dump truck was
declared the best domestic truck of the year as part of the eighth annual contest Best Commercial
Vehicle of the Year in Russia. The Ural-63685 dump truck was recognized as the best large-capacity
domestic vehicle at the exhibition Auto + Auto Mechanics-2008. The GAZ-330202 GAZelle
refrigerated van was declared Popular Commercial Vehicle of Russia 2008 at the 9th ComTrans
International Specialized Exhibition. The GAZelle brand took first place among Russian automobile
brands in the annual Best Russian Brands survey conducted by Interbrand Zintzmeyer & Lux.
Experts assess the value of the brand at USD 139 million.
In 2008 we continued to develop public–private partnerships on environmental protection,
employment and social programs. GAZ Group continued its participation in the Education national
project, supplying 1,150 GAZelle school buses to 76 federal subjects of the Russian Federation.
GAZ Group received the Gold Medal and a certificate for winning the European Quality Gold
Medal Contest in the category Russia’s 100 Best Organizations for outstanding achievement in
environmental protection and ensuring ecological security.
An extremely important outcome of this period was the mobilization of the company’s many
thousands of workers at all levels to implement crisis management measures at the end of 2008. The
far-reaching measures demanded that our actions be coordinated and prompt, and sometimes even
courageous, but these actions have laid the foundations for the company to see the crisis through
with minimal losses and maximum business performance. The steps taken in 2008 will allow us to
achieve the goals of GAZ Group’s crisis management program: ensuring that operating activities at
all production sites reach breakeven level, and creating a positive cash flow in order to service the
loan portfolio and suppliers contracts on time.
Sergey Georgievich Zanozin,
Chairman of the Management Board
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GAZ Group general information
GAZ Group profile
GAZ Group is one of Russia’s largest car manufacturers. Its product line includes light commercial
vehicles, passenger cars and trucks, buses, road construction equipment, engines and fueling
equipment, auto components for the entire model range in the LCV segment and mid-size trucks,
and also spare parts.
GAZ Group has seven divisions1, each responsible for a line of business, and each of which includes
manufacturing enterprises as well as the relevant sales & distribution companies. The Group
includes 18 major automobile and equipment manufacturing facilities in ten regions of Russia.
The parent company and center of consolidation of GAZ Group’s financial results is OAO GAZ.
The senior management body of OAO GAZ is the General Meeting of Shareholders. OOO GAZ
Group Management Company is the executive body of OAO GAZ; its director – the Chairman of
the Management Board – is appointed by decision of the Board of Directors of OAO GAZ. OAO
Russian Machines is the principal shareholder of OAO GAZ.
Divisions and main enterprises of the Group
Light Commercial Vehicles Division2
• OOO GAZ Automobile Plant (commercial vehicles);
• LDV Group Limited (Birmingham, UK).
Passenger Car Division
• OOO GAZ Automobile Plant (passenger cars).
Truck Division
• OAO Ural Automobile Plant;
• OAO Saransk Automobile Plant.
Bus Division
• OOO Pavlovo Bus Plant;
• OOO Likino Bus Plant;
• OAO Golitsyno Bus Plant;
• OOO KAVZ;
• OAO Kanash Auto Components Plant.
Construction Equipment Division
• OAO Tver Excavator;
• OAO Bryansk Arsenal;
• ZAO Chelyabinsk Road Construction Machines;
• OOO Kovrovets Excavator Plant;
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Five Divisions in 2009
At the end of 2008 the Light Commercial Vehicles Division was merged with the Passenger Car Division into the
Light Commercial and Passenger Vehicles Division; however the number of lines of business remained seven. In
preparing the 2008 Annual Report, we used the previous classification of Divisions that was in effect throughout the
reporting year.
2
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•
OAO Zavolzhsk Caterpillar Tractor Plant.
Powertrain Division
• OAO Autodiesel (YaMZ);
• OAO Ulyanovsk Motor Plant;
• OOO Nizhny Novgorod Motors;
• OAO Yaroslavl Diesel Equipment Plant;
• OAO Yaroslavl Fuel Equipment Plant.
Automobile Components Division
• OAO GAZ (automobile components).
Sales revenues of GAZ Group breakdown, 2008 *
1,8%
15,2%
3,9%
0,3%
29,5%
0,9%
9,7%
5,5%
12,3%
20,9%
Passenger cars
Light commercial vehicles
Trucks
Buses
Construction equipment
Engines
Fuel-delivery systems
Stationary units
Other core products
Other types of activity
* Here and throughout the report: source - GAZ Group data
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GAZ Group mission and strategy
The Mission of GAZ Group is to manufacture commercial vehicles that guarantee benefits to
purchasers thanks to uncompromising quality and reliable servicing, supported by highly competent
personnel and suppliers, and innovation in both manufacturing and products.
Pursuing this mission will make it possible to maximize shareholder value and make a substantial
contribution to improving the quality of life in the regions where we have a presence, among other
things by implementing advanced environmental standards.
The Objective of the Group is to become a world-class automobile manufacturer specializing in
commercial vehicles. To achieve this objective, Group management has formulated the following
key long-term strategic objectives:
1 To gain critical business weight and become a specialized global player on the international
market for commercial vehicles.
2 To master internal product development competences to meet best international practices.
The principal tools to achieve the Group’s strategic objectives are:
•
•
renewal of the model range;
bringing in strategic equity partners to GAZ Group with the aim of involving them in the
development of the company (products, technology, processes);
• implementation of lean manufacturing system at all Group enterprises and restructuring of
manufacturing;
• consistent and system-wide improvement in the company’s quality and key competencies in the
areas of managing human capital, managing investments, engineering and producing competitive
products, quality, the production system, environmental management, purchasing, sales, and
after-sales servicing;
• focus on the creation of long-term stable leadership in the Russian and CIS markets. Gradual
expansion on markets outside the CIS as new products, resources and competencies become
available.
The global financial crisis has had an extremely negative impact on the Russian economy. One of
the sectors that have suffered most from the crisis is the automobile industry. Sales of cars and
components had already dropped significantly by the second half of 2008. The sharpest drop was in
the fourth quarter of 2008. Depending on the segment, sales decreased by 43% to 82%, and for 2008
as a whole from 17% to 58%. Fundamental market factors were the reasons that sales fell so rapidly:
increased cost of lending, reduction in disposable income, higher prices for materials and parts.
Under conditions of a deep economic contraction, a company’s ability to react quickly to adverse
changes in market conditions becomes especially important. GAZ Group has set a number of
strategic priorities, the implementation of which should make it possible to come through the crisis
with minimal losses, earn as much as possible with existing products and markets, and enter the
post-crisis cycle in 3–5 years with new products:
•
•
optimizing the assets and management system of GAZ Group;
fundamentally changing investment policy: to minimize investments from equity and invest
in new products using project financing mechanisms;
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•
pursuing partnership projects in areas of activity where GAZ Group does not possess
sufficient competencies.
In the short term, the Group has planned measures that should ensure that operating activities will
not be loss-making from 1 July 2009. These actions are distributed in three main areas:
1 Cost reductions:
• reduction in the cost of products;
• decrease in working capital;
• reduction in purchasing prices;
• restructuring of production facilities;
• optimization of staffing costs;
• deferral of payment of principal and interest on loans (taking loan extensions into account);
• discounting and installment payment of accounts receivable.
2 Increase in sales:
• incentives for commercial sales;
• development of export sales;
• increase in sales of spare parts and services;
• development of financial instruments (leasing and loan programs);
• servicing of state orders and budget-funded procurement.
3 Development of the product portfolio:
• design and manufacturing of products with a lower cost of production;
• reduction in the number of model configurations;
• production of high-margin products;
• finding external co-financing of new projects;
• investment only in key projects.
This crisis management program will allow GAZ Group to recover and renew itself:
•
•
•
•
to complete 2009 without operating losses;
to establish a positive cash flow for settlements with creditors and reduction of loan portfolio;
to bring new products to market and create a promising product line-up for 2013–2015;
to minimize costs at all production facilities and streamline the management structure.
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Organizational structure
LEVEL OF MANAGEMENT
The Group’s organizational structure encompasses a number of manufacturing and supporting
companies. GAZ Group currently includes more than 30 subsidiaries and associates of OAO GAZ*.
MC
(Management
Company)
Management Company
Main functions:
- management of the company’s business portfolios
- corporate development strategy
- corporate governance
Centralized competencies:
- UEC (Unified Engineering Center) – engineering
- TZK GAZ (Trade and procurements company) – procurements
- Finance and settlements center – centralized treasury
Divisions – business development
• Light Commercial Vehicles Division
• Bus Division
Divisions
• Truck Division
• Construction Equipment Division
• Powertrain Division
• Passenger Cars Division
• Auto Components Division
Companies and trading houses
Companies – production
Trading houses - sales
* here and below, the structure indicates the equity share in the company belonging to OAO GAZ.
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Key events of 2008
2008
February
GAZ Group has developed a new purchasing strategy and a policy of relations with components
suppliers
Relations with components suppliers are based on long-term contracts, the Group continues the
processes of establishing a unified purchasing service, demonopolization of suppliers and attraction
of alternative partners ready to meet the certification requirements, to learn from the practice of the
world manufacturers and to implement the principles of lean manufacturing and economic
transparency; more active actions are taken in conclusion of strategic contracts that guarantee
quality and financial stability of all the facilities constituting the technological chain, as well as
make the large-scale projects of GAZ Group for renewal of the whole model range competitive and
complying with the expectations of the automobile market.
GAZ Group expands its line of engines for the automobile industry
GAZ Group Development Strategy stipulates that the car assembly enterprises of GAZ Group
should be supplied with the company’s own engines as much as possible. The Group has begun
commercial production of an updated version of the UMZ-4216 gasoline engine. This engine meets
the Euro-3 standard and is designed for use in GAZelle models. The first series of GAZelles with
UMZ-4216 Euro-3 standard engines was manufactured at Gorky automobile plant and shipped to
dealers.
GAZ Group launches the first Russian Euro-4 compliant inline engine, the YaMZ-534
The Yaroslavl engine plant, OAO Autodiesel (YaMZ) has launched YaMZ-534 - the first Russian
four-cylinder inline engine that meets the Euro-4 standard. The YaMZ-534 Euro-4 compliant engine
is installed in the experimental section of Autodiesel test box for an extended testing period. The
YaMZ-530 family of engines was developed in cooperation with one of Europe’s leading
engineering firms – AVL List GmbH of Austria. More than three billion roubles have already been
invested in the project.
March
Launch of test production of the new Siber passenger car at GAZ automobile plant
The large-scale project with the initiation period of April 2006 when GAZ Group and
Chrysler signed an agreement on the purchase of the production assets of the Sterling Heights Plant
in Detroit, Michigan has been completed. Construction of a new high-technology production
complex was completed by 2008 at the company’s Nizhny Novgorod passenger car production
facility. At the beginning of 2008 the full production cycle was in place: body welding and painting,
car assembly and full processing for delivery to the client. A total of 44 robotic systems are involved
in the body production process, including 294 Japanese Nachi robots and German Kuka robots. An
effective quality control system based on the automation of processes at all stages of the car
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manufacturing process has been developed and implemented for the production of passenger cars.
The manufacturing process is 85% automated.
A new warranty period is set for GAZelle vehicles
From 2008, the warranty period for GAZelles is increased up to two years or 60 thousand km. It
results from the work on product quality improvement done by GAZ Group. In 2007, more than 50
quality improvement programs for units and assemblies were implemented.
American heat-treatment line is started at Autodiesel
Autodiesel (YaMZ) has launched a new AFC-Holcroft (USA) heat-treatment line (purchased at 133
million RUB), intended to support greater volume of production of powertrains with Euro-3
specifications. The replacement of the worn-out heat treatment equipment with new modern
equipment will allow the company to ensure a stable flow of production, increase product quality,
shrink losses from defective products, and reduce energy and labor costs.
First operation of the Euro-4 engine YaMZ-650
At the technical base of the English engineering firm Ricardo UK Limited, GAZ Group performed
the first operation of the YaMZ-650 engine in its Euro-4 modification. The operation of the engine
was successful, which lays a solid foundation for discussing practical issues on the assembly of
prototypes and delivering them to MAZ RUP.
GAZ Group recognized as one of the Russia’s most environmentally friendly organizations
GAZ Group has been awarded the Gold Medal and a certificate for winning the European Quality
Gold Medal Contest in the category “Russia’s 100 Top Organizations. Ecology and ecological
management”. The awards were presented to GAZ Group for outstanding achievements in
environmental protection and supporting ecological security. Over the past several years the
enterprises of GAZ Group have performed systematic work to improve ecological conditions.
April
GAZelle is declared the people’s commercial vehicle of Russia
GAZ-330202 GAZelle (insulated van) is declared the winner of the 2008 Russian People’s
Commercial Vehicle contest within the framework of the 9th International trade show “ComTrans”.
Magna held an exhibition, “Magna Tech Show”, for GAZ Group employees
More than 300 representatives of the 7 Divisions and 18 facilities of GAZ Group have been
introduced to the technologies and products of the 9 subdivisions of Magna. Furthermore in the
framework of the exhibition a seminar on personnel development and training was held for the HR
employees of the GAZ Group Divisions. “Magna makes such presentations in Europe several times
a year, but for our shareholder, partner and customer, GAZ Group, we make it for the first time”, said Mr. Hubert Hoedl, the Vice-Preident of Magna international Europe. “I am sure, it the starting
point for further deepening of our cooperation”, - said Mr. Hubert Hoedl.
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The event resulted in the work on possible joint projects in all the business areas of GAZ Group and
Magna. The Magna Tech Show exhibition is the starting point of the program for transfer of
competencies from Magna to GAZ Group in the sphere of car manufacturing in compliance with the
international standards.
Ural – the best Russian truck of the year
The Ural-6563 vehicle produced by the URAL automobile plant of GAZ Group is declared the best
Russian truck of the year in the framework of the VIII contest “The Best Commercial Vehicle of the
year in Russia” at the “ComTrans-2008” exhibition.
The GAZ Group Trade House is declared the best supplier
The GAZ Group Trade House Russian Machines won the contest “The best supplier of cars and
special vehicles in 2007” following the results of the contest in the framework of the IV All-Russian
Forum-Exhibition “Goszakaz-2008”. The GAZ Group facilities actively participated in fulfillment
of the most important state orders: vehicle fleet renewal for a number of ministries and agencies of
the Russian Federation as well as in high priority national projects “Education” and “Healthcare”.
The Construction Equipment Division substantially increases its output in the first quarter
Based on the results of the first quarter, ОАО TVEKS produced 59% more multipurpose wheeled
excavators than during the corresponding period of the previous year, while OAO Bryansk Arsenal
increased its production of construction equipment by almost 10%. Improvements to the production
system, an active innovation policy and the implementation of high-technology equipment allowed
OAO TVEKS to maintain an optimal daily rate of the assembly line in the first quarter – 12
excavators, which is half as many as during the same period of the previous year.
May
GAZ Group won the tender for supply of minibus-type GAZelles for children transportation
Based on the decision of the auction committee of the Federal Education Agency, state contracts for
supply of 11-seat GAZelle school buses were concluded with GAZ Group. Within a year GAZ
Group supplied a batch of the first certified GAZelle school minibuses in Russia under the program
“Purchase of buses for education institutions in rural areas” within the framework of the Education
national project to 76 Federation entities for 587 million 500 thousand rubles.
GAZ Group Ural trucks took part in the Victory Parade in the Red Square
More than 80 vehicles produced by the GAZ Group URAL automobile plant took part in the
weapons and military equipment parade on the 9 May in the Red Square, Moscow, in honour of the
63 anniversary of the Great Patriotic War Victory. The most numerous group of Urals that took part
in preparation and conduction of the Victory parade was responsible for transportation of the powerwielding structures personnel to the venue. These were drop side trucks Ural-43206 (4х4) and Ural4320 (6х6) that are in series production on the main line of the plant.
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June
GAZ Group and Sberbank of Russia conclude a partnership agreement
German Gref, Chairman of the Management Board of Sberbank of Russia, and Sergey Zanozin,
Chairman of the Management Board of GAZ Group, in the presence of Valery Shantsev, Nizhny
Novgorod oblast governor, signed a partnership agreement which was aimed at developing the
companies’ strategic partnership in managing the Group’s cash flows. An important point of the
agreement is that Sberbank of Russia will provide investment resources to finance GAZ Group’s
international projects.
GAZ Group receives a syndicated loan of USD 215 million
GAZ Group announces the signing of a loan agreement under which the company will be provided
with a syndicated loan equal to USD 215 million. The initial authorized leading organizers of the
syndicate of financial institutions participating in the agreement were the banks Barclays Capital,
Commerzbank Aktiengesellschaft, and Natixis. This agreement is the largest syndicated loan ever
given to a Russian car manufacturer. The loan was provided for a term of three years and is
unsecured. The interest rate on the loan is LIBOR + 2.5% per annum.
Decisions taken by the Annual General Meeting of Shareholders
Four new directors were elected to the Board of Directors: Karl-Heinz Kalbfell, Siegfried Wolf,
Alexey Barantsev and Konstantin Akimov. Erik Eberhardson became the Chairman of the Board of
Directors. The meeting adopted a new version of the Charter of OAO GAZ, Regulations On the
General Meetings of Shareholders of OAO GAZ, Regulations On the Board of Directors of OAO
GAZ, Regulations On the Internal Audit Committee of OAO GAZ, which strengthen the role of the
Board of Directors in managing the company and take into account new Russian statutory
requirements on the corporate charter documents. The introduction of new representatives of foreign
management to the Board of Directors has allowed the Group to use the experience of successful
directors of the global car industry and raised the level of corporate governance at GAZ Group.
Director of the Supervisory Board under the Board of Directors of OAO GAZ elected
A new expert body, the Supervisory Board, has been created under the Board of Directors of OAO
GAZ. N.A. Pugin, President of OAO GAZ, was elected Chairman of the Supervisory Board. The
Supervisory Board works as an expert consultative body of the Board of Directors of OAO GAZ,
preparing opinions and proposals on issues that lie within the competence of the Board of Directors.
The new expert body formation has helped to raise the quality and degree of consideration given to
decisions of the Board of Directors.
July
Series production of Volga Siber is started
On 25 July, the series production of Volga Siber was started. Representatives of federal and regional
governmental authorities, power-wielding structures, industry-specific public organizations,
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corporate clients, partners, dealers and experts took part in the ceremony of the first finished vehicle
production.
Prime-Minister V.V. Putin carried out a test-drive of the new car produced by GAZ Group
Within the framework of his visit, the Russian Federation Prime-Minister Putin viewed the Volga
Siber production and personally carried out a test-drive of the new passenger car. Mr. Putin
especially emphasized the quality system implemented at all the stages of the car development.
OAO GAZ acquires 80.66% of OAO ZZGT
The Board of Directors of OAO GAZ approves the acquisition of an 80.66% equity share in OAO
Zavolzhsk Caterpillar Tractor Plant, thereby completing the process of integrating this enterprise
into corporate structure of GAZ Group. OAO ZZGT manufactures caterpillar-track snow- and
swamp-going vehicles for the oil-and-gas industry, as well as for electrical-power companies. This
asset is a good fit for the Group’s asset structure and operates successfully in the promising segment
of construction equipment.
GAZ Group developed a new 40-ton crane
The Urginsky machine-building plant developed the КС-65720-1 crane on basis of the modern Ural6563 chassis (8х4). The crane is equipped with 4-section extension-type arm of 28,5 m as well as
with a 8,5 m extension bar with fly jib functions. For the convenience of the operator a unique
system of joystick control is used. At a later stage other models of road construction and special
vehicles will be developed on basis of the Ural-6563 chassis.
August
GAZ Group supplied special vehicles to OJSC Rosneft and Russian Railways
ZAO “Chelyabinsk road construction vehicles” supplied a batch of DZ-98 graders to a subsidiary of
OAO Rosneft for large-scale construction works at the Rosneft Vankorsk oilfield facilities and later
on for construction of a main pipe Eastern Siberia – Pacific Ocean. “Chelyabinsk road construction
vehicles” also shipped 16 V-160 front loaders and 13 heavy graders to Russian Railways. The
vehicles are used for construction and maintenance of railways in Russia.
GAZ Group presented Volga Siber cars and new configurations of MAXUS at the “Moscow
International Motor Show - 2008”
The Volga Siber cars were presented at the Moscow Motor Show in comfort and lux configurations
equipped with a 4-cylinder in-line Chrysler engine (Euro-4) with the displacement of 2,0 and 2,4 L
and 141 and 143 hp with manual and automatic gearboxes. GAZ Group also presented two versions
of the MAXUS light commercial vehicle:
- a combi vehicle with numerous options making it more comfortable for the driver and the
passengers;
- a vehicle for recreation and travelling.
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September
GAZ Group introduces ISO/TS 16949
GAZ Group has begun work to introduce ISO/TS 16949 – an international quality management
standard for automobile manufacturers The transition to the quality system adopted by the global
automobile industry will allow us to raise the competitiveness of the company’s products on the
domestic and foreign markets. GAZ Group currently has an ISO-9001:2000 quality system in place;
companies undergo annual certification for this standard.
GAZ Group buses were awarded the “Best Bus of the Year in Russia” title
The REAL buses produced by “Russian Buses Marco” and the LIAZ-5292 low floor hybrid bus
produced by Likino Bus Plant were declared the best Russian city buses of the year at the
“International Transport Forum – 2008” held in Moscow.
BEGINNING OF THE CRISIS IN THE RUSSIAN AUTOMOTIVE INDUSTRY. IMPLEMENTATION OF
THE GAZ GROUP ANTI-CRISIS PROGRAM.
In Quarter 4 of 2008, the impact of the world financial crisis on the automotive industry in Russia
and all over the world was the most acute. The situation in the Company was affected by a dramatic
drop in the main demand segments, reduced purchase power of the customers, unavailability of
credit facilities and reduction of the market capacity by 50–70% in various segments. These factors
overturned the positive trend of the first half-year when the growth of the GAZ Group revenue
amounted to 20% versus the same period of 2007. GAZ Group was one of the first in this industry to
start implementing the anti-crisis program. Since October 2008, the Company had initiated measures
on cost reduction, reduction of inventory and finished goods and optimization of technological
processes which allowed to balance the production process in compliance with the market demand,
to reduce selling costs by one third, to avoid overstocking and to preserve human resources by the
end of the year.
October
First Volga Siber passenger cars went into retail sales
GAZ Group has shipped the first batch of 50 Volga Siber passenger cars to the Company certified
dealer centers in Saint Petersburg, Stavropol, Orel and Nizhny Novgorod for retail sales. The two
configurations of Volga Siber - comfort and lux - are there for sale.
GAZ Group URAL Plant was awarded with the Russian Government Quality Prize
GAZ Group URAL Automotive Plant became the winner of the Russian Government Quality Prize.
The main criteria of this prestigious government award are customer oriented and consistent efforts
in target achievement, management based on processes and facts awareness, involvement of
employees in continuous learning and innovation development, partnership development, public
relationships and result orientation.
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OAP TVEKS launches a new technology line
The company has successfully completed one of the main projects of the Construction Equipment
Division of GAZ Group for 2008 – creation of a full production cycle of new uniform cabins for
excavators, cranes and other construction equipment. Total investments in this project were about
RUB 114 million.
November
GAZ Group is recognized for the maturity of its corporate governance
The consortium of the ExpertRA Rating Agency and the Russian Institute of Directors, using a
jointly developed methodology, researched the quality of corporate governance of OAO GAZ and
awarded the company the rating of “mature corporate governance practice”.
The GAZelle brand leads among the automotive brands of Russia
The results of the annual “Best Russian Brands” survey by Interbrand Zintzmeyer&Lux that has
been rating Russian brands since 2000, are summarized. In 2008, GAZelle won the first place
among the Russian automotive brands. According to the Interbrand assessment the value of this
brand amounted to 139 mln US dollars or 3 564 mln rubles in 2008.
GAZ Group begins the production of medical vehicles on the basis of PAZ and LiAZ buses
GAZ Group continues to expand the line of special-purpose buses. GAZ Group has begun the
production of medical vehicles on the basis of PAZ and LiAZ buses, jointly with NPO
Automedcomplex.
GAZ Group is ranked 14th in the environmental rating of Russia’s 3000 largest companies in 2008
GAZ Group was once again in the top 100 large enterprises in Russia for the 2008 environmental
rating, holding the 14th spot and rising nine places from its 2007 rating. From 2005 to 2008 the
enterprises of GAZ Group reduced their pollutants by 28%, and the total quantity of solid
production wastes by 41%.
December
Mr. Putin, the Russian Federation Prime-Minister, emphasized the necessity for the Governmental
to support the project of medium diesel engine produced by GAZ Group
On 2 December 2009, Mr. Putin, the Russian Prime-Minister, visited the GAZ Group Yaroslavl
Motor Plant on his business trip to the Yaroslavl Region. Mr. Putin was informed of the status of the
launch of the 530 medium diesel engine family – the first Russian Euro-4 engine matching the best
world analogues in terms of customer requirements. While discussing the prospects of the new
diesel engine implementation Mr. Putin said that “the planned modernization must lead to the
growth of labor efficiency which certainly should result in considerable improvements in engine and
vehicle manufacturing sectors”.
16
GAZ Group supplied GAZelle school microbuses under the Education national priority project
By 1 December 2009, GAZ Group had fulfilled the state order for GAZelle microbuses to be
supplied under the program “Purchase of buses for educational institutions in rural areas” within the
framework of the Education national project. GAZ Group supplied 1 150 GAZelle school
microbuses to 76 RF constituent entities for the amount of 587 500 thousand rubles. The GAZelle
school bus is the first Russian special microbus designed for children transportation that obtained an
official vehicle type approval. The GAZelle school bus was certified for compliance with all the
Russian Federation requirements including the children transportation safety requirements
established by the GOST R 51160-98 Standard.
Key events of the beginning of 2009
January
GAZ Group signs the agreement to supply Ural trucks for the construction of the Eastern Siberia–
Pacific Ocean pipeline
OAO Ural AZ has signed the agreement with Transneft to supply 45 Ural trucks. The Ural off-road
trucks will be used in the construction of the Eastern Siberia–Pacific Ocean pipeline. The Ural plant
has been supplying trucks for the construction of the Eastern Siberia–Pacific Ocean pipeline for
three years now. Over 2007–2008, the Ural plant supplied 340 vehicles to this project.
GAZ Group started equipping light commercial vehicles with in-house manufactured engines which
allowed a 10% reduction of the GAZelle selling price
GAZ Group took a decision to equip the GAZelle and Sobol light commercial vehicles from 2009
with engines produced by OJSC UMZ being a part of GAZ Group, to increase the product
performance characteristics and to boost the demand under the condition of the market capacity
reduction. This allowed a 10% reduction of the GAZelle selling price. The equipment of the GAZ
LCV`s with the Ulyanovsk Motor Plant engines contributes to the Company strategy of maximum
meeting of the Company demands in terms engines and powertrains with in-house manufactured
products. The strategy is focused on ensuring independence of the manufacturer from suppliers of
the key element in the product cost management – the platform and powertrain of the vehicle.
February
The RF Government Committee under the direction of Mr. I. Shuvalov declared the GAZ Group
anti-crisis strategy “the most promising one out of the analyzed strategies”
GAZ Group is implementing its own anti-crisis strategy that will allow to ensure operational break
even at all the production sites from 1 July 2009 and to generate positive cash inflow for payment of
debts to the creditors and reduction of the credit portfolio. The main factors of the cost reduction in
2009 include product cost reduction by 20%, restructuring (compression) of production areas
(savings amount to 3 bln rub), reduction of working capital by 50%, launch of products with higher
profit margin, implementation of training programs for the employees in order to retain work force
in the strained labor market. In addition to the anti-crisis program, GAZ Group is working on the
17
projects for the future. GAZ Group is still active in product development and ready to come out with
a profitable proposal for the market in 2009. Price reduction is the decisive factor in the
circumstances of the liquidity crisis in the commercial vehicles market. In the second half of 2009
the Group is planning to launch the GAZelle vehicles with an original simplified design without
deterioration in terms of the service life and performance characteristics. Considerable cost
reduction will be achieved by way of design changes, component price reductions, better utilization
of production resources and reserves and optimization of production processes. The GAZelle Plus
project is another direction of activities aimed at improving the vehicle performance characteristics
and expanding the product range. SOP is planned for 2010. The target is to improve the quality and
reliability of the main components and systems, such as rear axle, brake system, steering
mechanism, gear box, as well as to improve the fuel economy, to reduce maintenance costs through
increased service intervals. This will result in lower cost of ownership and better pricing offer in the
segment of new and used foreign LCV`s. The Company has long-term plans related to the
development of the GAZelle 3 new generation vehicle.
Federal programs of anticipatory training have been launched to ensure jobs availability in future
GAZ Group has launched the program of advanced training for over 7 thousand of their employees
to become part of the state supported retraining program, in order to ensure employment availability
in the environment of falling production volumes. The workers will be trained to improve their skills
or to get an additional specialization, with guaranteed employment at their current work stations.
Based on the Federal program of anticipatory training, GAZ Group has developed a number of
additional measures to prevent massive layoffs and to ensure employment for their workers for the
period of up to 18 months with the financial support both from the Company and Regional
Authorities.
New system of quality management based on Opel quality standards implemented at GAZ LCV
facility
The experience gained by GAZ while launching the Volga Siber production in line with
international standards of quality has been transferred to the GAZ LCV production facility. After
having a chance to work for GM, the GAZ key quality inspectors developed and implemented the
quality management system based on Opel quality standards. It comprises a system of production
quality assurance of the pressing, wielding, painting and final assembly operations, as well as the
finished product audit through the eyes of the customer based on the GCA (Global Customer Audit)
GM standard. This method helps to see the quality of the vehicle through the eyes of the most
experienced and demanding vehicle owner and ensures significantly improved product quality. The
key auditors were trained and certified at the Opel plant in Russelheim (Germany) and at the Magna
Steyr plant in Graz (Austria). Thanks to the new quality management system the number of defects
on completely built commercial vehicles was reduced by over 1.5 times.
18
Main lines of business
Light commercial vehicles (LCV) and medium commercial vehicles (MCV)
Market description and GAZ Group’s market position
The growth in the market for commercial vehicles in the first half of 2008 was due first and
foremost to the growth of the Russian economy. In the pre-crisis period of 2008, when GDP growth
reached 8%, the market for commercial equipment was also showing growth. However, growth rates
were lower than in the same period of 2007. The reduced rate of growth was due to the significant
decrease in the imports of Chinese-manufactured automobiles at the start of 2008, which was related
to the introduction of the Euro-3 standard and the tightening of vehicle certification rules in January
2008, which led to a large volume of imports of foreign cars at the end of 2007 and reduced to a
minimum the import of Chinese-manufactured vehicles in 2008 (according to the result of first half
of 2008 the import of cars was two times less than during the same period of 2007, and five times
less than for the second half of 2007).
After the financial crisis began (end of September), sales decreased significantly. Average monthly
deviation of sales from the sales forecast made 60%. The slight growth of the market in December
2008 was the result of imports made in anticipation of the change in customs legislation from
January 2009.
In 2008 in total the commercial vehicle market decreased by 7.5%.
The Light Commercial Vehicles Division sold a total of 166,004 vehicles to dealers in 2008, of
which 141,274 were light commercial vehicles and 24,730 were trucks (GAZ).
LCV
For 2008, sales of light-duty trucks to dealers totaled 133,324 (including sales of Maxus vans in the
Russian Federation).
Structure of the Russian LCV market, 2008
12,8%
GAZ
10,9%
Maxus
UAZ
JVs
6,2%
58,3%
10,8%
New imports
Used imports
1,0%
19
Cargo LCVs
The market for cargo LCVs can be divided into two segments: dropside LCVs and full-metal vans.
The market for cargo LCVs shrank by 11% for 2008 as a whole, including 20% for the market for
dropside LCVs. The market for vans rose by 3.8%, mainly to the growth of imports of new vehicles
and the release of new Russian-manufactured models.
GAZ Group had a 58.3% share of the cargo LCV market, including 79.4% of the market for
dropside LCVs and 34.3% of the market for full-metal vans.
A total of 82,342 cargo LCVs were shipped to dealers, while GAZ Group sales to end users totaled
67,258 vehicles (including sales of Maxus vans in Russia).
A total of 28,033 full-metal vans were shipped to dealers.
Microbuses
The microbus market in 2008 was virtually identical to that in 2007 (growth for the year was 0.5%).
However, there was some substitution of GAZ and UAZ microbuses for other players: new and used
foreign models, as well as buses produced by joint ventures.
Sales to end users of new imported microbuses, as well as vehicles of joint ventures, grew by about
77%, while sales of used microbuses rose by 26.1%.
A total of 22,949 microbuses were shipped to dealers.
The microbus market consists of two segments: commercial and corporate microbuses.
Structure of the Russian microbus market, 2008
27,3%
GAZ
36,0%
Maxus
UAZ
0,4%
JVs
New imports
16,3%
11,7%
Used imports
8,3%
The growth of the corporate bus segment in 2008 was 7.9% (compared to 18.7% in 2007). GAZ
Group sales to end users totaled 13,585 (including Russian sales of 201 Maxus vans).
20
MCV
The market for medium trucks in 2008 fell by 13.1%, as compared to growth of 21.5% in 2007.
Sales of new foreign models dropped by 32.6%, while sales of used foreign vehicles rose by 22.5%.
Shipments of medium trucks to dealers totaled 24,730 (including 5,754 Valdai trucks).
Structure of the MCV market, 2008
11,80%
15,73%
GAZ 3310
GAZ 3309/09
ZIL
16,68%
JV s
New imports
40,63%
Us ed imports
13,33%
1,83%
The products of GAZ Group are used in a wide range of activities. In the structure of LCV
consumers in 2008, first place was held by retail and services, second was held by state structures
and manufacturing, and third place was shared by construction and other areas.
MCV purchasers could be grouped as follows: the maximum share went to retail enterprises, second
to state structures, services, and manufacturing, while third place went to construction and other
areas of activity.
Structure of LCV consumers in Russia, 2008
13%
Structure of MCV consumers in Russia, 2008
13%
22%
27%
Retail
Services
16%
Construction
Services
18%
Construction
Manufacturing
Manufacturing
22%
15%
Retail
State structures
State structures
Other consumers
17%
Other consumers
16%
12%
9%
21
Main sales markets
Sales of automobiles to end users totaled 161,203 in 2008. The domestic market traditionally
accounts for the majority of sales – 129,571 units, which is more than 70% of total sales. The
Moscow and Nizhny Novgorod regions remained major sales regions for LCVs and MCVs
(accounting for 21.3% and 22.2% of sales, respectively).
Sales of vehicles manufactured in the Russian Federation to end users in other CIS countries equaled
30,342 units, while countries further abroad accounted for 1,290 sales (not counting Maxus sales).
The main export markets in the CIS were Ukraine (61% share) and Belarus (14%).
Sales structure of GAZ LCV and MCV, 2008
19%
CIS
1%
3%
Non-CIS foreign
countries
RF ССС (Trading
House)
Russia (dealers)
77%
Sales of commercial vehicles under the Maxus brand abroad
Sales of GAZ Group commercial vehicles under the Maxus brand outside the Russian Federation in
2008 equaled 7195 units, which is 27% less than sales in 2007. Sales of buses in the extra-small
class were 658 units, while sales of dropside trucks and chassis trucks were 1060 units, and van
sales equaled 2988 units. Compared to 2007, sales of dropside trucks and chassis trucks rose by 412
units.
Revenues from the sales of the main products of the LDV Group in 2008 were equal to
approximately RUB 3.5 billion.
GAZ Group retains the right to manufacture and sell Maxus vehicles in Russia and the CIS, and may
in future consider the feasibility of releasing Maxus vehicles in Russia, depending on market
demands.
Model range
No significant changes were made to the model range of the Light Commercial Vehicles and
Medium Trucks Division. The Group’s line-up in this segment consists of numerous configurations
of the base models GAZelle, Sobol, GAZ-3307/09 and Valdai:
•
•
•
•
GAZ-3302 (GAZelle dropside);
GAZ-2705 (GAZelle full-metal van);
GAZ-3221 (GAZelle microbus);
GAZ-2310 (Sobol dropside);
22
•
•
•
•
•
GAZ-2752 (Sobol full-metal van);
GAZ-2217 (Sobol microbus);
Medium-duty trucks with a GVW of up to 9 tonnes;
GAZ-3307; GAZ-3308; GAZ-3309;
GAZ-3310 (Valdai).
At the end of 2008, the product lineup of the Maxus family consisted of the following
configurations:
•
•
•
•
•
•
•
Van, from 2.8 t to 3.5 t – 39 versions;
Crew cab, 3.5 t – 3 versions;
Chassis cab, from 2.8 t to 3.5 t – 9 versions;
Dump truck, 3.5 t – 3 variants;
Drop-side, from 2.8 t to 3.5 t – 9 versions;
Microbus, from 3.2 t to 3.9 t – 12 versions;
Combi, from 3.2 t to 3.9 t – 12 versions.
Main achievements in 2008
About RUB 434 million was invested in the Division in 2008. The bulk of investments were made
in the following projects:
•
Creation of the GAZelle of new generation – RUB 114.1 million. This project is being
implemented using the Product Planning Development System (PPDS) with the participation
of Magna company. A conceptual model for the product has been developed on the basis of
market research conducted jointly with the American company BCG. The product concept
and engineering documentation for test units were developed in 2008.
•
Meeting certification requirements for GAZelle and Sobol vehicles – RUB 46.8 million.
Projects are underway to ensure that Euro-4 norms are met (introduction planned for 1
January 2010) and upgrade the existing GAZelle in order to improve its consumer appeal.
GAZ Group is continuing to improve the quality of its products and post-sales servicing.
Specifically, from the start of 2008 warranties were doubled on the GAZelle family of vehicles. The
increase in the length of the warranty was the result of a GAZ Group program to improve the
reliability and quality of GAZelles.
The Group’s leading positions in the commercial vehicle segment are confirmed by market research.
GAZelle took first place among Russian automobile brands in the annual Best Russian Brands
survey by Interbrand Zintzmeyer & Lux in 2008. Interbrand estimates that the brand has a value of
USD 139 million, or RUB 3.564 billion. In the overall rating of Russian brands, GAZelle took 29th
spot, after raw materials, telecommunications, and construction brands, food products and bank
brands.
The new products developed by GAZ Group reflect a desire to meet strict environmental standards
and satisfy our clients’ diverse needs. At a major international commercial transport exhibition in
September 2008 the Group presented the prototype of a Maxus light commercial vehicle with an
electric motor (with the working name ECV1). The creation of this new electric vehicle is part of the
Group’s policy of pursuing environmental transportation solutions.
23
Main areas of development for 2009
The main goal of the Division in 2009 is to maintain at least 50% market share in the LCV segment
in Russia.
At the moment, one of the Group’s priority areas of development is to cut the cost of production of
our products without reducing their consumer appeal, by using available resources more efficiently.
In 2009, our investments in the unified Light Commercial and Passenger Vehicle Division will aim
to update the existing GAZelle to give it greater consumer appeal, and to create a completely new
light commercial vehicle.
In this time of crisis, the development of financial instruments is particularly important. The
following proprietary financial instruments are being developed and implemented:
1 Proprietary lending programs with manufacturer subsidies. These programs will be implemented
across Russia. Major banks will be involved in joint programs: Sberbank of Russia, VTB-24,
Rosselkhozbank, Rusfinance Bank.
2 Proprietary leasing programs with manufacturer subsidies. These programs will be implemented
across Russia. Major leasing companies will be involved in joint programs: Element Leasing,
Sberbank Mortgage Company, VTB-24 (Leasing System). The program with Element Leasing
started at the end of April. Programs with other partner leasing companies started at the end of
May.
3 Proprietary lending and leasing programs with regional banks. During 2009 it is planned to
identify partner banks in Russia, develop program parameters, and sign contracts.
4 Proprietary lending and leasing programs for CIS countries. During 2009 it is planned to identify
partner financial institutions in CIS countries (Ukraine, Kazakhstan), develop program
parameters, and sign contracts.
5 Proprietary Trade-In program. The implementation and development of Trade-In services will be
mandatory at GAZ automobile centers and will be rolled out in stages over 2009. Work is
currently underway to find and recruit professional players on the used car market to act as
intermediaries. The Group is organizing the development of training programs for dealer centers
and the training itself.
24
Buses
The contraction of the bus market in 2008 was 38% in physical terms, while the financial size of the
market shrank by 25%.
The Bus Division holds leading positions in the Russian market, and from year to year has shown a
stable increase in sales of 12–14% in physical terms and 25–35% in monetary terms. The Bus
Division continues to hold the largest share of the Russian market in both physical (68%) and in
monetary terms (47%).
Structure of the Russian bus market, 2008
Structure of the bus market, large and extralarge class, 2008
2%
23%
GAZ Group
4%
6%
LiAZ
NefAZ
4%
MAZ
6%
Other Russian
manufacturers
9%
Volzhanin
49%
8%
Hyundai
Daewoo
Man
68%
Others
Imported buses
21%
Structure of the bus market, small class, 2008
Structure of the bus market, medium class, 2008
2%
2% 5%
8%
PAZ
3%
RA-Marco
2%
6%
4%
PAZ
7%
KAVZ
RZGA
44%
King Long Bus
Bogdan
MAZ
Yutong
Hyundai
Others
Others
37%
80%
25
Structure of the bus market, intercity and tourist segment, 2008
15%
Hyundai
33%
Kia
14%
King Long Bus
GolAZ
NefAZ
Yutong
13%
6%
7%
Others
12%
Small class
The sharp drop in the volume of the market in the small bus class in 2008 was the result of a
decrease in production of the Hyundai County by the RZGA factory and the reduction of imports of
Chinese-made buses.
Import manufacturers are showing sales drops on the level of 51% in physical terms.
Shipments of small buses to dealers in 2008 totaled 12,092 units.
Medium class
The medium class bus segment in Russia fell by 33% in physical terms against 2007, while the drop
in monetary terms was 21%. Sales in the medium class bus segment have shown positive trends for
the past several years, at the level of 25–30% per year. The stable growth in the segment was the
result of the advanced age of medium-sized buses in Russia and interest in products on the part of
both municipal and privately owned transport companies.
It should be noted that the 59% contraction of sales of foreign-manufactured buses occurred mainly
at the expense of Chinese-manufactured buses: sales of Chinese buses shrank by 75% year-on-year.
Shipments of medium-class buses to dealers in 2008 totaled 3,100 units.
Despite the reduced sales, the Division remains the segment leader. The Division’s share in this
segment increased to 81% in 2008, which is 12% more than the 2007 figure of 69%.
Large and extra-large class
In terms of market position, municipal buses in the large and extra-large classes occupy a single
niche from the point of view of the segment of consumers, decision-making and purchasing
mechanisms, financing, and use. The redistribution of demand between buses of the large and extralarge classes is related solely to the formation of a consumer bus fleet fitting the parameters of the
route network. The Bus Division takes a flexible approach to setting its production plans, based on
the market situation and demand structure. The drop in sales in 2008 occurred mainly in the largeclass segment; the extra-large bus segment showed slight growth.
For the Division as a whole, sales of large and extra-large buses to dealers in 2008 totaled 2,088
units, including 1,557 units in the large class and 531 units in the extra-large class.
26
Total sales in the Russian market of city/suburban buses in the large and extra-large classes
contracted by 40% compared to 2007. The segment of city/suburban buses in the large and extralarge classes is currently stagnant.
Sales of imported buses decreased by 49% compared to 2007 for the following reasons:
•
•
decrease in sales of Chinese-made buses (91% drop);
decrease in sales of used buses (56% drop).
The Division’s sales to end users in the extra-large class segment in 2008 rose by 47%, while its
share of the large bus segment fell by 32%. The Bus Division’s share was 49%, which is 11% higher
than the 2007 figure of 38%.
Inter-city and tourist buses
The long-haul bus segment showed the best results of any market segment: the contraction was only
11% compared to the overall market fall of 38%.
The primary trend in the segment was the active replacement of used imported buses with new ones.
However, due to fundamental structural changes related to the sharp decrease in the share of used
imported buses and the shift in demand to new buses, the financial volume of the market rose by
11% in 2008 year-on-year. Sales of all foreign-manufactured buses contracted by 12% in physical
terms in 2008 compared to 2007. However, sales of new imported buses rose by 31%, while sales of
used buses fell by 40%.
Shipments of buses in the intercity and tourist class to dealers totaled 335 units in 2008, which is 9%
higher than the previous year’s figure.
The Division’s share in this segment increased by 2% making 14%.
Main sales markets
The Russian Federation is the Division’s main sales market. The main foreign sales markets in 2008
were the traditional markets of CIS countries, primarily Ukraine, Turkmenistan and Belorussiya.
Alongside with the development of sales in the CIS, the Division plans to actively enter Eastern
European markets (Romania, Bulgaria, and others) with modern products that meet Euro-4 and
Euro-5 standards, as well as trolleybus products.
Model range
Small class
The base of the Bus Division’s Russian-market model range in 2008 in the small class consisted of
the PAZ-32053/54, the PAZ-3204, PAZ-3206 AWD and city low-floor buses PAZ-3237. In January
2008 the sales of REAL city bus were initiated. The product is the result of joint work of GAZ
Group and the Brazilian company Marcopolo. This segment also included the specialized school
buses PAZ-32053-70 и PAZ-3206-70..
Medium class
The Division’s sales in the medium class consisted primarily of:
•
•
KAVZ-4235 Aurora in its suburban and intercity configurations;
PAZ-4234;
27
•
•
KAVZ-4239 – medium-class city bus;
KAVZ-4238 Aurora – medium-class intercity bus.
Large and extra-large class
The Bus Division’s sales in this segment in 2008 consisted mainly of the LiAZ-5256 and its various
configurations, as well as the articulated LiAZ-6212. Also on the market in 2008 there were:
•
•
•
•
•
LIAZ-5293 – bus with low level of entry in the area of the front and middle passenger doors;
LIAZ-5292 – low-floor city bus;
LIAZ-5213 – articulated low-floor city bus;
GOLAZ-6228 – city bus with low level of entry in the area of the front and middle passenger
doors;
Trolleybuses on the LIAZ bus body bases.
Intercity and tourist buses
The Division’s model range of intercity and tourist buses includes:
•
•
•
GolAZ-52911 Cruise – tourist bus based on Scania chassis;
Andare-1000 – tourist bus based on Scania and Hyundai chassis, the product of the Russian
Buses Marco joint venture;
GOLAZ-LIAZ-5256 – intercity bus.
ООО KAVZ started the series production of medium-class low floor KAVZ-4239 bus, meant for
city routes of large cities and regional centers with the population of approximately 500 000 people
as base passenger transportation vehicle.
In August 2008 there started the mass production of the new bus model GOLAZ-6228-10 intended
for intercity routes between major cities and megapolises with high passenger traffic. This bus is
fully certified in accordance with Russian GOST standards. The first mass-production GOLAZ6228-10 buses were shipped in autumn to a transportation company in the Vologda oblast.
OOO Likino bus plant of GAZ Group presented the hybrid bus concept on the LIAZ-5292 bus base.
GAZ Group’s Likino bus plant reorganized its main assembly line. As a result of the project, the
company’s main assembly line was able to start mass produce all models of LIAZ buses, including
the large-class low-floor LIAZ-5292 and the extra-large LIAZ-6213, LIAZ-5293 with gas-power
engine, and the base modifications LIAZ-6212 and LIAZ-5256. The transition from short-run to
mass production of low-floor buses in the large and extra-large classes has allowed the company to
satisfy growing market demand for these models. Due to the implementation of modern assemblyline technologies, production efficiency has risen and production costs have been cut.
ООО PAZ has introduced the new Eisenmann paint spraying complex.
REAL buses produced by Russian Buses Marco and the low-floor hybrid LIAZ-5292 produced by
Likino Bus Plant were declared the best Russian-made city buses of the year. This was announced at
the ceremony for Best Bus of the Year in Russia at the International Transportation Forum 2008
(MAF-2008) in Moscow.
28
GAZ Group has developed and begun the production of medical vehicles on the basis of PAZ and
LIAZ buses jointly with NPO Automedcomplex. The development of mobile medical complexes on
the basis of PAZ and LIAZ buses makes it possible to optimize the system of primary medical care
to all population groups and to ensure the full availability of medical examinations to residents of
remote and agricultural regions. GAZ Group and NPO Automedcomplex are continuing to expand
their line of special-purpose buses: a mobile library has been developed on the basis of the PAZ4234.
About RUB 379 million was invested in the Bus Division in 2008. The bulk of investments were
made in the following projects:
•
•
•
•
•
Development of a prototype for certification testing and preparation for the production of
low-floor articulated buses LIAZ-6213 (diesel) and 6213 (gas-powered) with Euro-4, Euro-5
powertrains. Certification in Europe – RUB 12.3 million.
Preparations for the production of PAZ-3204 buses – RUB 33.7 million; the project is aimed
at the expansion of the model range. Preparation for the production in accordance with
Russian legislation for the Euro-3 and Euro-4 ecological classes was initiated.
Development of REAL small bus with W-type engine; production organization – RUB 22.8
million. The project involves the creation and marketing of a small-class bus with a W-type
engine configuration (complying with the carriage rules of UNECE No. 36), built by the
Marcopolo company (Brazil) on the basis of a Hyundai County (South Korea) chassis.
Preparations for the production and release of PAZ-4230, KAVZ-4238 Aurora and KAVZ4253 Aurora buses, taking into account Euro-3 environmental standards and the new GOST
R-107 standard – RUB 19.6 million.
Production of prototypes for KAVZ-4239 bus and preparations for production of 500 buses
per year – RUB 20.9 million. The project involves the development of a new bus with the
aim of winning the market segment of medium-class semi-low-floor city buses. For the
project there was developed engineering documentation, the prototype was manufactured,
certification was completed and production began.
In 2009 investments will be used to complete investment projects already in progress:
•
•
•
•
“Preparation for the production of PAZ-3204 buses with spring suspension”. Continuation of
the project with the aim of introducing a new product to the market according to Russian
statutory requirements on Euro-4 environmental standards.
“Preparation for production and restyling of PAZ-3205 buses family”. Under this project
there will be restyled the small bus line of PAZ-3203 and PAZ-23053-07 “School bus”
(changes to front and rear treatments, improvement of the bus interior), and also preparations
for mass production for the introduction of Euro-4 ecological norms.
“Preparations for the production of PAZ-4234-E-4 (Cummins), modernization of the bus
drivetrain, restyling”. This project will make it possible to update the drivetrains of the
medium-class line of buses PAZ-4234 (use of Cummins diesel engines), and improve its
technical and environmental specifications. Preparations will be made for the introduction of
Euro-4 norms in 2010.
“Development and reconstruction of the paint shop using modern equipment”. This project
will make it possible to improve quality and consumer appeal of the model range of PAZ
buses by implementing promising body-painting technologies.
29
Trucks
The Russian truck market also saw a decrease in sales in 2008. Sales growth relative to 2007 was
only achieved in the first eight months of 2008. Sales of trucks in Russia dropped sharply starting
from September 2008 due to the economic crisis. The reduction in the volumes of bank lending and
leasing programs, together with the economic uncertainty, led to a sharp fall in demand.
The current adverse economic situation in Russia affected sales and production due to a change in
lending terms, higher interest rates, and other factors.
Sales of trucks on the Russian market, 2007-2008
1 200 00
2 154 3
24 684
900 00
26 268
3 975 8
Im por t (u s e d)
Im por t (n ew )
86 04
600 00
O t her (d om es tic )
5 52 2
13 637
ZIL
1 200 2
MA Z
KamA Z
Ura l
300 00
39 164
3 630 9
14 369
1 340 8
20 07
2 00 8
0
Structure of the Russian commercial market for all-wheel drive trucks, 2008
2,1%
Ural
40,7%
KamAZ
57,2%
KrAZ
30
The share of Ural vehicles on the Russian commercial market for all-wheel drive automobiles was
57.2%.
GAZ Group continued its entry into the new segment of road trucks in 2008, the sales equaled 855
vehicles. The company’s share of the Russian market made about 3%.
Main sales markets
The sales markets for the Truck Division are the Russian commercial market, Russian security and
defense agencies (Ministry of Defense, Ministry of Internal Affairs, Federal Security Service, and
the Ministry of Emergency Situations), other CIS countries, and other foreign countries.
Breakdown of sales of the products of the
Truck Division, 2008
4%
Sales of Ural all-wheel drive vehicles on the
Russian commercial market by consumer
segment, 2008
7%
5%
3% 2%
Russian commercial
market
State structures
Oil-and-gas industry
20%
Industrial construction
25%
Forestry
Other CIS countries
64%
Foreign, non-CIS
Agriculture
Other
70%
The main consumers on the commercial market are the following economic sectors:
•
oil-and-gas sector;
•
forestry products sector;
•
road agencies, utilities and public services;
•
agriculture.
The main export consumers are the military agencies of foreign countries (Angola, Egypt, Ethiopia,
Sudan, Syria, etc.) and CIS countries (Kazakhstan, Turkmenistan). Annual contracts are usually
signed with the above mentioned consumers. Export shipments average 1,500 vehicles per year.
In 2008 export sales of Ural equaled 1 725 vehicles.
Model range
The model range of the Truck Division consists of two vehicle families:
•
all-wheel drive vehicles with axle configurations 4x4, 6x6 and 8x8, with various wheelbases
and a chassis for special equipment with a 10x10 configuration;
•
non-all-wheel drive vehicles with axle configurations of 6x4 and 8x4.
In 2008 the model range was developed in the following areas:
31
•
development of all-wheel drive commercial trucks with a new look;
•
organization of mass production of road trucks;
•
non-all-wheel drive trucks in the C-26 segment;
•
next-generation all-wheel drive commercial trucks.
In March 2008, OAO AZ Ural set a record for the daily assembly of trucks: daily production rose to
76 vehicles. This is the first time the factory has attained this rate of production in its entire postSoviet history. The transition to the assembly of 76 vehicles per day was the result of the
implementation of a new production system based on the Toyota Production System (TPS) and lean
manufacturing, and is aimed at optimizing the assembly process and reducing production costs.
In 2008 OAO AZ Ural introduced road dump trucks with increased capacity – the Ural-63685 and
Ural-6563 - to the commercial vehicle market. Ural road trucks with increased capacity make it
possible to substantially reduce the cost of transporting light-weight cargos (coal, peat, forestry
processing wastes, etc.). A new 40-tonne mobile crane on a Ural-6563 chassis was also introduced.
About RUB 195 million was invested in the Truck Division in 2008. The bulk of investments –
RUB 51.8 million – was made in completing work on the project “Organization of mass production
of Ural road vehicles”. In addition, development work was performed to create new products – road
trucks in the C-26 segment, and a new generation of all-wheel drive vehicles.
Investments in the Truck Division in 2009 will be aimed at completing investment projects already
in progress, as well as the project “All-Wheel Drive Commercial Trucks with a New Look”. This
project involves bringing a competitive modernized product to market as fast as possible with
minimum investment costs, capable of leveling off the inevitable fall in sales during the economic
crisis. This project will involve the elaboration of technical solutions that will be used in the
production of next-generation all-wheel drive vehicles.
During the economic crisis the important areas of development include programs providing
additional services to consumers, among which there are:
•
•
•
•
•
vehicles sales using Trade-ins;
leasing;
overall repair process of a vehicle;
development of a mechanism for fixed product prices;
increase in spare parts sales.
32
Construction equipment
The development of the Russian construction equipment market in 2008 can be divided into two
periods: active growth at the start of the year, and gradual decrease in the second half of the year.
The general trends on the market have not changed over the period. As in 2007, there was an
increase in imports of construction equipment, and foreign manufacturers considered and
implemented projects to create assembly facilities for road construction equipment in Russia.
Experts believe that the construction equipment market contracted by more than 20% in 2008. This
is due primarily to the financial crisis, which was the reason for the changing economic climate in
the country and worldwide, which had a negative effect on the rate of construction work as a whole.
As a result, there was a drop in demand for construction equipment: a significant fall was noticeable
in December, and by January demand had dropped by 30–40%. Consequently, suppliers’
warehouses began to accumulate a large volume of idle equipment, which had been ordered before
the crisis hit, in anticipation of growing demand.
The Division’s main products are excavators, graders, and front-end loaders.
Excavators are the main product in the construction equipment business, which brought in
approximately 45% of total sales revenues in the segment in 2008. GAZ Group has 36% of the
market for wheeled excavators. Production in 2008 totaled 1,985 units. Tracked excavators make up
only a trivial part of the total number of the excavators produced by the Division, and their market
share is only about 2% with 441 units produced.
Graders account for more than 28% of the Division’s total sales revenues in the segment. The
Division produced 1,074 units of this type of equipment in 2008.
Front-end loaders are new to the Construction Equipment Division; they account for 5% of sales
revenues, in 2008 the production totaled 310 units.
In the graders segment, under the conditions of a crisis of liquidity the Division was able to increase
its share of the Russian market by 3% against 2007, holding down a 53% market share. In the other
main segments – front-end loaders and excavators – sales fell by 33% against 2007.
Share of the Construction Equipment Division in the Russian construction equipment market,
2008
11%
Imports (new)
11%
Imports (used)
14%
64%
Construction
Equipment Division
Other domestic
manufacturers
33
In total, GAZ Group produced 4,439 units of construction equipment in 2008.
Main sales markets
The main consumers of the division’s products are:
•
•
•
•
•
road construction organizations;
utilities companies;
agencies of the Ministry of Defense;
enterprises that are part of Russian Railroads;
enterprises in the oil-and-gas sector.
Sales of the Construction Equipment Division were made through two main sales channels: sales
through an independent dealer network and direct sales (government orders, corporate purchasers).
The main region of sales is Russia, which accounted for more than 80% of sales.
The largest sales channel is the independent dealer network – sales through this network accounted
for 84% and have been growing steadily over the past three years.
At present the dealer network consists of 53 dealers in Russia, other CIS countries, and also a
number of other foreign countries (Afghanistan, Serbia, and Bulgaria).
Sales houses in other CIS and foreign countries are located in the capitals of the respective
countries.
The main targets for export growth in countries outside the CIS are developing countries such as
Mongolia, Iran, Romania, Bulgaria, the UAE, and Argentina. The Division considers its main
competitors to be global players on the construction equipment market (with budget models) and
Chinese manufacturers. The development strategy on the markets outside the CIS consists in
ensuring a high level of service for the equipment and improving reliability through the use of
imported parts.
The goal of GAZ Group’s Construction Equipment Division in the Russian market is to retain and
increase market share and its presence in every product segment through a range of measures
including pricing policy, improved servicing and better product quality.
Model range
The Construction Equipment Division is currently producing the following types of road
construction equipment:
•
•
•
•
Wheeled and tracked excavators in size groups 2, 3 and 4, produced by OAO TVEKS and
OOO EZ Kovrovets.
Graders in classes 100, 140, 180 and 250;
Front-end and industrial loaders in size classes 3–7;
Asphalt layers and other equipment.
In 2008 the Construction Equipment Division simultaneously introduced several innovations in the
main construction equipment segments: excavators – EK-20, ET-26i (excavator–loader), ET-26FS,
ET-18LC; loaders – B-140, B-175; graders – GS-25.11; asphalt layers – Asf-G-3-08.
34
In July 2008, in cooperation with leading leasing companies, GAZ Group developed a competitive
program for leasing wheeled excavators manufactured by OAO TVEKS. This offering was
developed specifically for construction companies, since the construction equipment leasing is an
easy and reliable way for companies, that want to acquire new equipment, to renew their
construction equipment fleet at minimal initial cost and without significant investments.
OAO TVEKS has successfully completed one of the main projects of the Construction Equipment
Division for 2008 – creation of a full production cycle of new uniform cabins for excavators, cranes
and other construction equipment. The new technological line covers all stages of cabin production:
manufacturing of parts, high-precision profiles, welding, high-technology painting of cabins and
their final assembly. The flexible production system on the new line makes it possible to improve
the efficiency of production and reduce production costs. The facility has the designed capacity to
produce 6,000 cabins per year.
About RUB 390 million was invested in the Construction Equipment Division in 2008.
The bulk of investments were made in the following projects:
•
•
•
•
•
“Modernization of mechanical processing, improvement of modular production centers by
employing modern, flexible, and high-output equipment, configured in modular production
centers” (OAO TVEKS) – RUB 94.765 million (modernization of the mechanical processing
machining equipment – improvement of the quality of parts for excavators).
“Creation of the Cabin modular production center with a closed production cycle for 6,000
cabins per year” – RUB 39.928 million (creation of a manufacturing unit for modern uniform
cabins for wheeled and tracked excavators).
“Preparations for mass production of ET-26” – RUB 35.402 million (implementation of new
high-technology equipment for mechanical processing, welding, and materials cutting, to support
the production of ET-26 type excavators with high quality and improved appearance).
“Organization of unified production of hydraulic cylinders at OAO TVEKS” – RUB 24.515
million (creation of production facilities for 140 hydraulic cylinders per day, elimination of the
need to develop similar facilities at other Divisional enterprises, improvement of product quality,
improvement of consumer appeal of products by improving the serviceability of hydraulic
cylinders, setting up the basis for flanged hydraulic cylinders production).
“Organization of production of updated GS-18.05 graders and creation of the GS-25 heavy
grader” – RUB 20.974 million (purchase of new equipment).
The Division’s main development areas are:
•
Raising the level of product quality: creation of a quality control system at division enterprises,
taking into account the construction of a defect level assessment complex at all main
technological stages.
• Restructuring of the Division’s production facilities:
• OAO TVEKS – optimization of the plant’s production floor; creation of a separate unit to
produce metal structures, hydraulic cylinders , and cabins for the Construction Equipment
Division’s enterprises and external consumers;
• OOO EZ Kovrovets – optimization of the plant’s production floor. Transfer of production of
tracked excavators ET-14/16/18/20/26 and construction equipment on their basis to OAO
Tver Excavator;
• ZAO ChSDM – optimization of the plant’s production floor;
35
•
Development of low-cost products: creation of the DZ-98 grader and EK-12 grader at a low cost,
in order to ensure higher volumes of equipment sales.
• Reduction in the prime cost of products by 20%: business optimization (purchasing, energy,
change in technologies, design changes).
In 2009 investments will be directed to completing investment projects already underway:
•
•
Creation of the Cabin modular production center (OAO TVEKS);
Creation and development of GS-25 grader production at OAO Bryansk Arsenal.
36
Passenger cars
Individuals make up the majority of purchasers of GAZ Group passenger cars. They account for 70–
75% of the total volume of sales in this segment, while the share of sales to organizations covers the
remaining 25–30%. The main consumers of Volga automobiles are people in the 31–50-year age
group.
Model range
The Division’s model range consists of four models:
•
•
•
•
the GAZ-31105 gasoline-engine sedan;
the GAZ-310221 gasoline-engine station wagon;
the GAZ-3102 gasoline-engine sedan;
the Volga Siber gasoline-engine sedan.
Mass production of the new Volga Siber began in July 2008. The Volga Siber is a modern D-class
sedan, developed on the basis of the best Western technologies, assembled using high-quality
materials and parts and wholly adjusted to Russian running conditions. The Volga Siber was
designed by a famous English design studio, taking all modern trends into account.
The car is built on the JR-41 platform; GAZ Group acquired a license to use and develop this
platform from the Chrysler Corporation. Thus, the Group:
•
•
•
•
acquired access to new technologies;
saved time on automobile development;
acquired modern equipment (three thousand machine tools of various uses);
trained employees in TPS principles and ensured the high quality of manufactured vehicles.
About RUB 1,427 million was invested in the Passenger Car Division in 2008. The bulk of
investment, RUB 1.398 billion, was directed to the project “Organization of the Volga Siber
production”.
In July 2008 a gala ceremony was held for the launch of mass production of the Volga Siber, the
ceremony was attended by Russian Prime Minister Vladimir Putin. Official sales of the Volga Siber
began in November 2008.
The year 2008 saw the completion of a large-scale project on the construction of a new
manufacturing complex for passenger vehicles that meets global quality standards. The complex has
the capacity to produce about 100,000 vehicles per year. The flexibility of technological processes
makes it possible to re-orient production to different vehicle platforms and different classes.
GAZ Group’s strategy presupposes the maintenance of its presence at the passenger car market and
formation of its long-term goals for the Group’s presence in the segment.
37
Powertrains
The development of the powertrain market is directly related to the development of the markets for
automobile, agricultural and construction equipment. The first three quarters of 2008 demonstrated a
trend to growth in all segments of the powertrain market. Starting from September 2008, due to
economical crisis, there was a significant drop in demand on the automobile and agricultural
equipment market in Russia. Shipments of GAZ Group engines to consumers in December 2008
were 5.5 times lower than those as of July 2008.
The Powertrain Division works in the following market segments:
•
•
•
•
•
•
gasoline engines for LCVs;
light diesel engines;
heavy diesel engines;
transmissions;
fuel-delivery systems;
stationary units.
Gasoline engines for LCVs
In 2008 UMZ gasoline engines were delivered to the assembly lines of the car makers OAO UAZ
and AZ GAZ.
In 2008 the Powertrain Division had approximately a 20% share of the gasoline engine market,
mainly due to deliveries of UMZ engines to OAO UAZ (part of the Sollers Group).
In 2008 GAZ Group management took the decision to supply its light commercial vehicles with the
UMZ engines in the amount of up to 100,000 engines per year. The implementation of this plan will
make it possible to increase UMZ engines share to 70–75% at the market.
Structure of the gasoline engine market for commercial equipment in 2008
0,4%
0,1%
19,8%
GAZ Group (OAO UMZ)
OAO ZMZ
ZAO AMUR
AMO ZIL
79,7%
38
Light diesel engines
Light diesel engines include engines with a displacement of up to 0.9 l/cylinder.
The production of commercial vehicles equipped with light diesel engines in Russia and the CIS is
still immature. The move over the past few years to diesel engines in light commercial vehicles in
Russia follows global trends and has occurred mainly through the import of LCVs produced by
leading European and Asian automobile companies.
Significant growth is forecast in this market segment in Russia and the rest of the CIS, primarily due
to the global trend, which in turn is related to the appearance of high-efficiency and economic diesel
engines.
In 2008 the Powertrain Division had about a 7% market share in the segment of light diesel engines.
A total of 1347 engines were produced.
Structure of the light diesel engine market, 2008
8,2%
GAZ Group
49,0%
ZMZ
42,8%
Imports
Heavy diesel engines
GAZ Group (OAO Autodiesel (YaMZ)) is Russia’s leading manufacturer of diesel engines in the 9–
18 l range and holds more than 50% of the market.
With the aim of maintaining leading positions and raising the technological level of products in the
heavy diesel engine segment, production of the YaMZ-650 engine continued in 2008 (inline 6cylinder engine with 311–412 hp) under license from Renault Trucks (France). The designed
capacity of production is 20,000 engines per year.
39
Structure of the heavy diesel engine market, 2008
Fuel-delivery systems
The Division’s products compete with fuel systems manufactured by Bosch, AO Motorpal, OAO
RAAZ, OAO NZTA and OAO AZTN at the fuel-delivery systems market.
Fuel-delivery systems are supplied to the assembly lines of the engine manufacturers – OAO
Autodiesel (YaMZ), OAO KAMAZ-Diesel, UP Minsk Motor Plant, OAO TMZ and OAO AMZ.
Structure of the fuel-delivery systems market, 2008
20,9%
GAZ Group
0,1%
44,9%
4,1%
OAO NZTA
OAO RAAZ
OAO AZTN
Imports
30,0%
Transmissions
In 2008 transmissions were supplied to the assembly lines of equipment manufacturers:
• YaMZ transmissions are manufactured by OAO Autodiesel for the company’s diesel
engines;
• GAZ transmissions are manufactured at OOO Nizhny Novgorod Motors for AZ GAZ
automobiles.
40
Stationary units
The Division produces diesel generators, which are used as autonomous power supplies in the
following fields:
•
Social and government sector: Ministry of Defense and Ministry of Emergency Situations,
housing and public utilities, municipalities (schools, hospitals, daycares, etc.);
• Extracting industry sector: oil and gas, geology, drilling, agriculture and forestry;
• Processing sector: construction, food industry, metallurgy;
• Consumer and services sector: cottages, new residences, tourism, hotels, banks,
telecommunications.
The stationary units model range is to be expanded through the manufacturing of units on the basis
of gas-powered YaMZ engines.
Model range
The Division’s main products are YaMZ brand heavy diesel engines, manufactured by OAO
Autodiesel (YaMZ). These engines and powertrains with a displacement of 11–26 l and 150–800 hp
are used in MAZ, Ural, KrAZ vehicles, buses, combines, tractors, special and other vehicles.
Gasoline engines with 120–150 hp are represented by the products of OAO UMZ (Ulyanovsk) and
are intended for light commercial vehicles, GAZelle and UAZ minibuses.
Fuel injection systems consist of YaZDA and YaZTA fuel pumps (Yaroslavl) for YaMZ, KAMAZ,
MMZ, TMZ and AMZ engines.
In addition, GAZ Group manufactures transmission, clutches, and also diesel and gasoline
generators with a power of 30–315 kW.
In 2008 the Division began mass manufacturing of the following new products:
• gasoline engines UMZ-4216 Euro-3, UMZ-4213 Euro-3;
• diesel engines YaMZ-656 Euro-3, YaMZ-658 Euro-3, YaMZ-650 Euro-3;
• fuel systems YaZDA Euro-3 for YaMZ, KAMAZ and MMZ engines.
Key achievements in 2008
1. In 2008 GAZ Group (OAO Ulyanovsk Motor Plant) began mass manufacturing of the upgraded
123 hp UMZ-4216 gasoline engine. The UMZ-4216 complies with Euro-3 standard and is
intended for light commercial vehicles manufactured by GAZ Group.
2. The plant’s commitment to high production standards was recognized by the Administration of
Yaroslavl oblast, which awarded OAO Autodiesel (YaMZ) a certificate for winning the regional
competition “Best in Quality Control”.
3. The Powertrain Division received RUB 2,358.7 million in investments in 2008. Most of the
investments were earmarked for implementation of the following projects:
• Development and industrial engineering of the new family of 100-315 hp YaMZ-530
engines. Total investments in 2008 equaled RUB 1,184.4 million.
• Development and industrial engineering of 11 liter R-6 engines, under license from
Renault Trucks (France). Total investments equaled RUB 372.6 million.
• Development and industrial engineering of 230-420 hp YaMZ-656 and YaMZ-658 Euro3 emission class engines. Total investments in 2008 equaled RUB 112.0 million.
41
•
•
•
•
Development and start-up of production of 6- and 9-speed transmissions for the
powertrain of YaMZ-656/658/650/536 engines. Total investments in 2008 equaled RUB
274.9 million.
Organization of manufacturing for fuel equipment that meets the Euro-3 requirements of
UNECE Regulation No. 49 on diesel engines. Total investments in 2008 equaled RUB
123.6 million.
Development and industrial engineering of the Euro-3 emission class UMZ-4216 family
of gasoline engines. Total investments in 2008 equaled RUB 4.2 million.
Development and industrial engineering of the Euro-4 emission class UMZ-4216 family
of gasoline engines. Total investments in 2008 equaled RUB 3.8 million.
Investments in the Powertrain Division in 2009 will be aimed at implementing the following key
projects:
•
•
•
•
Development and production engineering of the new family of 100-315 hp YaMZ-530
engines. This project will cover all of GAZ Group companies’ needs for medium-sized
diesel engines, thereby ensuring the Group’s independence from outside powertrain
suppliers.
Development and industrial engineering of Euro-4 and Euro-5 emission class 11 liter R-6
engines based on the YaMZ-650 Euro-3 engine. This project will allow to manufacture
sufficient volume of heavy Euro-4 and Euro-5 diesel engines to meet the market demand
within the timeframes established by the special technical regulations.
Development and industrial engineering of the Euro-3 emission class UMZ-4216 family of
gasoline engines. This project is aimed at expanding the manufacturing of OAO UMZ
gasoline engines to 100,000 units a year.
Euro-4 emission class UMZ-4216 gasoline engine. This project is being implemented to
ensure that the light commercial vehicles of GAZ Group are equipped with competitive
gasoline engines that meet Euro-4 emission standards starting from January 2010.
The search for strategic partners for industrial engineering of light diesel engines, Common Rail fuel
equipment for heavy and medium-sized diesel engines, and transmissions for medium-sized and
light diesel engines will also continue in 2009.
42
Auto components
The main market trends of the Auto Components Division in 2008 were:
•
•
•
•
•
•
•
•
predominance of supply to GAZ Group companies and through return cooperation over the
supply to external customers in overall supply volume;
growth in sales volume of all GAZ Group companies in 1H2008;
significant workload of the preparatory production facilities of OAO GAZ on the
manufacture of products for Group companies and internal production lines, as a result of
this the sales to outside clients could not be increased;
peak internal production workload of competitors, resulting in a growth in orders at OAO
GAZ;
significant growth in the cost of materials in the middle of the year;
development of the new products for OAO RZD;
expanding cooperation with OAO AvtoVAZ on line assembly of the products of the Volga
Automobile Plant using OAO GAZ parts;
sharp fall in production at the main production facility of OAO GAZ and Group companies
at the end of the year, and a resultant growth in overheads on the products of the Auto
Component Division.
Structure of the Auto Components market segment in 2008
Sales under
production
cooperation
24,6%
42,8%
Sales within the
holding
Sales to outside
cons umers
32,6%
Main sales markets
The key sales markets for the Auto Components Division in Russia and abroad in 2008 were:
•
•
•
•
supply of products to GAZ Group’s LCV assembly lines;
supply of counterparties of OAO TZK GAZ on the basis of production cooperation;
supply of products to GAZ Group companies;
supply to outside clients such as automobile and tractor plants, OAO RZD, and construction
companies.
43
Model range
The main products of the Auto Components Division in 2008 included:
• products for GAZ Group companies (parts, pre-finished components);
• products for OAO RZD (foundry and work shop products);
• products for automobile and tractor plants (wheel disks, clutches, pre-finished components);
• products for construction (road working equipment, clamp forms).
Structure of the castings and forgings market for the auto industry*
Company name
Specialization
KAMAZ-Metallurgy
GAZ
VKM-Steel
auto parts, drop shop and foundry pre-finished components
foundry pre-finished components (iron and steel)
drop shop pre-finished components, specialized
equipment, wheels
drop shop and foundry pre-finished components (iron)
drop shop and foundry pre-finished components, spare
parts
foundry pre-finished components (iron)
foundry pre-finished components
tractors, foundry pre-finished components (iron)
Chelyabinsk Forge-and-Press Plant
Tutaevo Motor Works
Cheboksary Aggregate Works
Promtraktor
Mtsensk Foundry
Minsk Tractor Works
Ruslich
Other manufacturers
Market
share
11.80%
6.83%
5.50%
3.00%
1.78%
1.68%
1.10%
1.00%
0.75%
0.60%
65.96%
* Based on expert estimates at the end of 2008.
Key achievements in 2008
Total investments in the Auto Components Division in 2008 equaled RUB 795 million.
A large share of the investments in 2008 was used to implement the following investment projects:
•
•
•
•
•
Development of production of ZMZ-405 EURO-3 cylinder blocks at the foundry of OAO
GAZ (RUB 96.5 million). Implementation of this project made it possible to start
commercial production of 405.1002015 cylinder blocks, and to manufacture various engine
blocks with a displacement of up to four liters and a weight of up to 100 kg;
Organization of manufacturing of Chrysler Sebring licensed vehicles (RUB 253 million).
Implementation of this project made it possible to organize a temporary warehouse for SKD
components at OAO GAZ;
A number of projects to ensure that the products manufactured at Nizhny Novgorod
production premises comply with the requirements of the Euro-3 standard. Total investments
equaled RUB 10.4 million;
Introduction of new technology for production of differentials (RUB 110 million).
Completion of the project to improve the quality of the rear axles of Gazel and Sobol
vehicles;
Environmental safety at the Auto Components Division (RUB 17 million). The purpose of
this project was to ensure environmental safety at the facilities of the Auto Component
Division, and to complete construction of the first stage of the industrial waste deposit site
near Igumnovo.
44
Due to the sharp fall in production at GAZ Group companies and the Group’s main production
facility, the main focus was placed on increasing sales (by more than twofold) to outside consumers
from various industries. This tactic allowed the load on the preparatory production facilities of OAO
GAZ to be increased via new sales markets and assimilation of new products, thereby lowering the
cost of production for assembly of automobiles.
Investments in the Auto Components Division in 2009 will be earmarked for the following projects:
1. Finalization of investment projects;
2. Maintenance of existing production facilities.
3. Implementation of measures to develop sales markets.
45
Corporate governance
GAZ Group’s corporate governance system
GAZ Group recognizes the importance of effective corporate governance for conducting business
successfully, and understands its high level of public and social responsibility. To achieve an
understanding among all interested parties, GAZ Group is committed to follow the principles set
forth in the Corporate Governance Code, and makes every reasonable effort to observe them in its
day-to-day business.
The Group’s main corporate governance principles ensure:
• that shareholders are able to exercise their rights related to participation in company’s
management;
• that all shareholders holding the same type (class) of shares are treated equally;
• that the Board of Directors performs strategic management of the Company’s activity,
exercises effective control over the activity of the executive bodies, and secures the
accountability of the members of the Board of Directors to the shareholders;
• effective monitoring of financial and business activity;
• that the Company’s executive bodies are able to manage day-to-day operations reasonably
and in good faith, and ensure the accountability of the executive bodies to the Board of
Directors and shareholders;
• timely disclosure of complete and reliable information on the Company, including on its
financial position, economic indicators, ownership structure and management, and major
corporate events;
• active cooperation between the Company and investors, creditors and other interested
parties, in order to increase the value of shares and other Company securities and improve
the Company’s corporate and other ratings;
• compliance with all effective legislation norms and local regulatory acts;
• increased role for the Company in the social development of the regions in which
subsidiaries and associates work, and increased social responsibility of the management and
the Company in general.
Pursuant to OAO GAZ’s Charter, the company’s management bodies include: the general meeting
of shareholders, the Board of Directors and the single executive body - the Chief Executive Officer,
whose authorities have been transferred to a management company – OOO GAZ Group
Management Company.
The General Meeting of Shareholders is the senior management body of OAO GAZ. In 2008 the
Company’s annual general meeting of shareholders was held on 27 June. The General Meeting of
Shareholders of OAO GAZ:
• elected the Board of Directors, which included four new directors: Karl-Heinz Kalbfell,
Siegfried Wolf, Alexey Barantsev and Konstantin Akimov. Erik Eberhardson was elected as
Chairman of the Board.
• new versions of the Charter of OAO GAZ, the Regulations On the General Meeting of
Shareholders, the Regulations On the Board of Directors, and the Regulations On the
Internal Audit Commission were approved. The new versions of these documents take into
46
account all legislative changes and make use of effective examples of corporate governance
practices, thereby improving the effectiveness of corporate governance.
The new versions of the Charter and regulations strengthen the management function of the Board
of Directors of the Company.
Board of Directors
The Board of Directors of OAO GAZ is responsible for overall management of the Company’s
operations, including issues of strategic planning and development of the Company and foreign
trade activity related to business, with the exception of those issues ascribed to the competence of
the Company’s general meeting of shareholders by the Company Charter.
Report on the activity of the Board of Directors in 2008
The Board of Directors of OAO GAZ held 17 meetings in 2008, seven of which were held in
person.
The following key issues concerning GAZ Group’s main lines of business were considered at the
Board of Directors meetings:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
On implementing GAZ Group restructuring project and the separation of the component
business;
On approving GAZ Group’s Code of Ethics;
On acquiring shares in OAO ZZGT;
GAZ Group’s corporate strategy;
Localization of Maxus in Russia;
On approving the Regulations On the Supervisory Board under the Board of Directors of
OAO GAZ;
On electing the members of the Supervisory Board under the Board of Directors of OAO
GAZ;
On the long-term integrated development strategy of GAZ Group up to 2020 and the
corporate strategy of GAZ Group for 2008-2012;
On transferring the authorities of a single executive body of OAO GAZ to a for-profit
organization (management company);
On providing charity support;
On forming the Strategy Committee under the Board of Directors of OAO GAZ;
On forming the Audit and Finance Committee under the Board of Directors of OAO GAZ;
On forming the Personnel and Remuneration Committee under the Board of Directors of
OAO GAZ;
Taking decisions on the placement of securities of OAO GAZ (series 01-04 bonds);
Crisis management program: objectives up to the end of 2008, and the action plan for their
achievement.
The following changes took place in the membership of the Board of Directors of OAO GAZ in
2008. Four new members joined the Board: Karl-Heinz Kalbfell, Siegfried Wolf, Alexey Barantsev
and Konstantin Akimov. Erik Eberhardson was elected as Chairman of the Board.
47
As of 31 December 2007 the Board of Directors included the following members: Peter Sergeevich
Zolotarev (Chairman), Dmitry Andreevich Vovk, Alexey Alexeevich Ipatov, Valery Gennadievich
Lukin, Nikolay Andreevich Pugin, Elena Viktorovna Syroezhkina, Alexander Valerievich Filatov,
Lars Erik Ebbe Eberhardson.
Members of the Board of Directors
(as of 31 December 2008)
Lars Erik Ebbe Eberhardson
Chairman of the Board of Directors of OAO GAZ
Education: higher
From 2002 to 2005 Mr. Eberhardson was the head of the Representative Office of Volvo
Construction Equipment in Russia. In 2005 Mr. Eberhardson joined OOO RusPromAuto
Management Company as Deputy CEO for Strategic Development. From June 2006 to 2007 Mr.
Eberhardson was the Chairman of GAZ Group Management Board, and from 2007 to 2008 was the
Managing Director of the Automotive Business at OAO Russian Machines. Since 2008 Mr.
Eberhardson is the Chairman of the Board of Directors of OAO GAZ.
Holds no shares in the company.
Konstantin Vladimirovich Akimov
Member of the Board of Directors of OAO GAZ
Education: higher
In 2003-2005 Konstantin Akimov headed the Phosprom Industrial Group, and from 2005 to 2008
headed Polair/Sovitalprodmash (the largest professional refrigeration equipment plant in Europe).
Since 2008 Mr. Akimov is Deputy CEO of OOO Basic Element for Production Asset Management.
Alexey Georgievich Barantsev
Education: higher
Mr. Barantsev was CEO of OAO GAZ from 2002 to 2005. In 2005 Mr. Barantsev was appointed
Director of the Nizhny Novgorod Block of OOO GAZ Group Management Company. In 2006-2007
Mr. Barantsev held the following positions at OOO GAZ Group Management Company: Director of
the Auto Components Division, Director of Production and Restructuring of GAZ Group, First
Deputy Chairman of the Management Board. In 2007-2008 Mr. Barantsev held the positions of
Director for Operational Development and First Deputy Chairman of the Management Board. In
2008 Mr. Barantsev took up the post of First Deputy CEO for Production at OAO Russian
Machines. In December 2008 Mr. Barantsev was appointed CEO of ZAO Glavstroy-Management
(the management company of the Construction Sector of Basic Element) and Chairman of the Board
of Directors of OAO Glavstroy.
48
Dmitry Andreevich Vovk
Education: higher
From 2002 to 2006 Dmitry Andreevich was the Director of the Human Resources Department at
OOO Basic Element. From 2006 to 2008 Mr. Vovk was Deputy CEO for Human Resources at OOO
Basic Element. Since 2008 Mr. Vovk has headed the Aviation Sector at OOO Basic Element.
Siegfried Wolf
Education: higher
From 2002 to 2005 Mr. Wolf was Executive Deputy Chairman of the Board of Directors of Magna
International Inc. Starting from April 2005 Siegfried Wolf has headed Magna International Inc. as
one of the Co-Chief Executive Officers of the concern.
Alexey Alexeevich Ipatov
Education: higher
From 2000 to the present Mr. Ipatov has been the General Director of NAMI (a federal state-owned
unitary enterprise).
Karl-Heinz Kalbfell
Education: higher
From 1998 to 2004 Mr. Kalbfell held the position of Senior Vice President for Product Strategy and
Development at BMW. From 2004 to 2005 Mr. Kalbfell was the Chairman and CEO of Rolls Royce
Motorcars Ltd. From January 2005 Mr. Kalbfell began working at Fiat as COO of Alfa Romeo, and
from February of the same year also headed Maserati SPA, which merged with Fiat. After leaving
Fiat in 2007, Mr. Kalbfell has been working as a product and international project consultant in the
automotive industry.
49
Valery Gennadievich Lukin
Education: higher
From 2003 to 2006 Mr. Lukin was the CEO of OAO Kamov-Holding. In 2006-2007 Mr. Lukin was
the CFO at OAO Russian Machines. Since 2007 Mr. Lukin has held the position of CEO of OAO
Russian Machines and has been a member of the Board of Directors of OAO Russian Machines and
OOO VPK since 2008.
Alexander Valerievich Filatov
Education: higher
From 2003 to 2005 Mr. Filatov was First Vice President of the Cascol Management Company. Since
2005 Mr. Filatov has held the position of Director for Strategic Planning and Development at OAO
Russian Machines.
Supervisory Board
The Supervisory Board has been operating under the Board of Directors of OAO GAZ as the senior
consulting and advisory body since 2008. The Supervisory Board considers the issues within its
competence, including the following:
• establishing the Company’s long-term strategic goals;
• improving the Company’s competitiveness and investment appeal;
• developing proposals and facilitating the approval by the Russian state authorities of national
strategies and development programs for the domestic machine-building complex, taking
into account the strategic interests of the Company and the machine-building complex in
general;
• assisting in the improvement of the regulatory and legal framework to ensure the smooth
development of the domestic machine-building industry, including drafting of relevant
initiatives;
• developing R&D activity and use of high-end technology by Company enterprises,
subsidiaries and associates;
• introduction of energy efficient and environmentally friendly technologies, promoting
scientific and technical development and re-equipment of production facilities and the
Company’s research, laboratory and testing bases, as well as those of subsidiaries and
associates;
• the Company’s social policy, including social partnership issues and social-economic
development of the regions in which the Company has a presence;
• the Company’s information policy;
• forming a positive image, improving the prestige and attractiveness of the professions that
make up the machine-building complex;
50
•
interaction with Russian and foreign public associations, international unions and machinebuilders associations.
N.A. Pugin, President of OAO GAZ, was elected the Chairman of the Supervisory Board. The
following were elected as members of the Supervisory Board under the Board of Directors of OAO
GAZ:
1. Nikolay Andreevich Pugin
2. Valery Pavlinovich Shantsev
3. Sergey Alexeevich Vakhrukov
4. Andrey Vladimirovich Dementiev
5. Andrey Gennadievich Svinarenko
6. Sergey Nikolaevich Katyrin
7. Andrey Alexandrovich Fefelov
8. Nikolay Pavlovich Laverov
9. Viktor Viktorovich Ivanter
10. Lev Lvovich Lyubimov
11. Dmitry Anatolievich Gulin
12. Roman Grigorievich Maev
The Supervisory Board functions as the expert advisory body of the Board of Directors of OAO
GAZ. It holds meetings as necessary, but at least once every three months. The creation of the
Supervisory Board contributes to the improvement in quality of the decisions of the Board of
Directors.
Remuneration
Criteria for determining the remuneration of the Board of Directors
The Regulations “On the Procedure for Remuneration and Compensation of Members of the Board
of Directors of OAO GAZ” were approved at the extraordinary general meeting of shareholders of
OAO GAZ held on 3 August 2006. These Regulations stipulate that remuneration shall be paid to
the members of the Board of Directors on a quarterly basis, based on a calculation of RUB 270,000
a month.
Remuneration paid to the Board of Directors in 2008
A payment was made for 2008 to all members of the Board of Directors for the period from 1
October 2007 to 30 September 2008 in the amount stipulated by the Regulations “On the Procedure
for Remuneration and Compensation of Members of the Board of Directors of OAO GAZ”, in the
total amount of RUB 27,855,291.98.
Criteria for determining the remuneration of the Management Company
The remuneration to be paid to the Management Company is determined by the Board of Directors
of OAO GAZ and fixed in the contract on assignment of the authorities of the single executive body
of OAO GAZ to the Management Company.
51
Remuneration paid to the Management Company in 2008
For the 12 months of 2008 the Management Company - OOO GAZ Group Management Company which performs the duties of the single executive body, was paid remuneration in the amount of
RUB 220,484,124 (including VAT).
Committees of the Board of Directors
Audit and Finance Committee, Personnel and Remuneration Committee, and Strategy Committee
were created to assist the Board of Directors and to improve its work efficiency.
Audit and Finance Committee
The Audit and Finance Committee under the Board of Directors was created for preliminary
consideration of issues and giving recommendations to the Board of Directors on adopting decisions
on audit and internal audit activity, the Company’s financial and management accounting, and
monitoring the systems of internal controls and risk management to the extent of the competence of
the Board of Directors.
Pursuant to the Regulations “On the Audit and Finance Committee under the Board of Directors of
OAO GAZ”, the Committee functions on an ongoing basis. Committee meetings are held if at least
half of the Committee members are present and at least once a month.
The Audit and Finance Committee had the following members in 2008:
• Andrey Anatolievich Bykov;
• Andrey Mikhailovich Elinson;
• Alexander Mikhailovich Lukin;
• Lars Erik Ebbe Eberhardson.
Personnel and Remuneration Committee
The Personnel and Remuneration Committee under the Board of Directors was created for
preliminary consideration of issues and giving recommendations to the Board of Directors on
adopting decisions on human resources policy and remuneration to the extent of the competence of
the Board of Directors.
Pursuant to the Regulations “On the Personnel and Remuneration Committee under the Board of
Directors of OAO GAZ” the Committee functions on an ongoing basis. Committee meetings are
held if at least half of the Committee members are present and at least once a month.
The Personnel and Remuneration Committee had the following members in 2008:
• Dmitry Vladimirovich Bulavinov;
• Dmitry Andreevich Vovk;
• Valery Gennadievich Lukin.
52
Strategy Committee
The Strategy Committee under the Board of Directors was created for preliminary consideration of
issues and giving recommendations to the Board of Directors on adopting decisions on the
Company’s development strategy, determining the main areas of business development, and
increasing the Company shareholders value.
Pursuant to the Regulations On the Strategy Committee under the Board of Directors of OAO GAZ,
the Committee functions on an ongoing basis. At that a decision of the Committee can be taken
through vote by correspondence (form of inquiries). Committee meetings are held if at least half of
the Committee members are present and at least once a month.
The Strategy Committee had the following members in 2008:
• Sergey Georgievich Zanozin;
• Alexey Alexeevich Ipatov;
• Karl-Heinz Kalbfell;
• Alexander Valerievich Filatov;
• Lars Erik Ebbe Eberhardson.
Executive bodies
The authorities of the Company’s single executive body have been assigned to a management
company – Limited-Liability Company GAZ Group Management Company. The decision to assign
the authorities was taken at the annual general meeting of shareholders of OAO GAZ. The contract
on assignment of the authorities of the single executive body as of 1 October 2008 was approved at
a meeting of the Board of Directors of OAO GAZ.
Members of the Management Board of the Management Company:
(as of 31 December 2008)
Sergey Georgievich Zanozin
Chairman of the Management Board
Education: higher
From 2002 to 2005 Mr. Zanozin was the Director General of OOO RusAvtobusProm. From 2005 to
2007 Mr. Zanozin held the position of Director of the Bus Division at OOO GAZ Group
Management Company. Since October 2007 Mr. Zanozin is the Chairman of the Management Board
of OOO GAZ Group Management Company.
Share in the charter capital of OAO GAZ: 0.0000050%. Share of ordinary shares in the Company
held by Mr. Zanozin: 0.0000054%
Leonid Evgenievich Dolgov
Member of the Management Board
Education: higher
53
From 2004 to 2005 Mr. Dolgov was the Director of the Strategic Marketing Department of OAO
RusPromAuto, and from 2005 to 2006 Mr. Dolgov was the Director for Strategic Development and
Marketing, Director of the Department for Strategic Analysis and the Business Environment, and
Director for Strategic Development and Marketing of the Construction Equipment Division of OOO
RusPromAuto Management Company. In 2006 Mr. Dolgov headed the Department of Strategic
Analysis and the Business Environment at OOO GAZ Group Management Company. From 2006 to
the present Mr. Dolgov is the Director of the Passenger Cars Division of OOO GAZ Group
Management Company. Since September 2007 Mr. Dolgov is CEO of ZAO GAZ Automobile
Company, and since 2008 is CEO of OOO MAXUS RUS and the General Director of OOO GAZ
Group Passenger Cars.
Holds no shares in the company
Enrico Sabinovich Damiano
Education: higher
From 2002 to 2005 Mr. Damiano was the Director of the Production Development Department at
OOO RusPromAuto. From September 2005 to 2006 Mr. Damiano held the post of Director of the
Production Development Department at OOO GAZ Group Management Company. From 2006 to
the present Mr. Damiano is the Director of GAZ Group Unified Engineering Center. Since 2007 Mr.
Damiano is CEO of OOO UEC, and since 2008 is a member of the Board of Directors of OAO
Autodiesel (YaMZ), OAO Ural AZ, OAO SAZ, OAO TVEKS, OAO ZZGT and OAO Pavlovo Bus.
Viktor Khristoforovich Korman
Education: higher
Since 2003 Mr. Korman is the General Director of OAO Ural AZ. In 2006 Mr. Korman also held the
position of Director of the Truck Division at OOO RusPromAuto Management Company, and since
2006 holds the position of Director of the Truck Division at OOO GAZ Group Management
Company. Since 2008 Mr. Korman is also a member of the Board of Directors of OAO ZZGT,
OAO TVEKS, OAO Bryansk Arsenal, ZAO ChSDM, OAO Ural AZ, OAO SAZ and ZAO CC
IFIG BelRusAuto.
Igor Nikolaevich Kulgan
Education: higher
From 2003 to 2005 Mr. Kulgan was the Director of Business Processes and Information Systems
Management at OOO RusPromAuto. From 2005 to 2006 Mr. Kulgan worked as the Director of the
54
Engine Division of OOO GAZ Group Management Company, and from 2006 to the present Mr.
Kulgan holds the position of Director of the Powertrain Division of OOO GAZ Group Management
Company. Since 2008 Mr. Kulgan is also Managing Director of OOO GAZ Group Powertrain.
Mr. Kulgan is Chairman of the Board of Directors of OAO Autodiesel (YaMZ), OAO YaZTA and
OAO UMZ, and a member of the Board of Directors of OAO YaZDA, OAO Tutaevo Motor Works
and ZAO CC IFIG BelRusAuto.
Tatiana Alexandrovna Luzhetskaya
Education: higher
In 2003-2004 Ms. Luzhetskaya was the Deputy CFO at OOO RusAutoProm Management
Company, in 2004-2008 Ms. Luzhetskaya worked as the Director for Finance and Economics of the
Bus Division of OOO GAZ Group Management Company. Since 2008 Ms. Luzhetskaya held the
position of Acting Deputy Chairman of the Management Board for Finance and Economics and
CFO at OOO GAZ Group Management Company.
Elena Viktorovna Matveeva
Education: higher
In 2003-2005 Ms. Matveeva was the Marketing Communications and Branding Director at ZAO
YUKOS Refining & Marketing. In 2005 Ms. Matveeva was the Director of Communications and
Public Relations of OOO Russian Machines. Since late 2005 Ms. Matveeva is Director of
Communications and Public Relations of OAO Russian Machines, and since 2006 is Deputy
Chairman of the Management Board and Director of Corporate Policy and Communications at OOO
GAZ Group Management Company.
Nikolay Borisovich Odintsov
Education: higher
During the period from 2003 to 2005 Mr. Odintsov held the position of General Director of OOO
CTH Russian Buses. In 2005-2008 Mr. Odintsov worked as the Managing Director of OOO CTH
Russian Buses of OOO GAZ Group Management Company (formerly OOO RusPromAuto
Management Company). From 2008 to the present Mr. Odintsov is Director of the Bus Division of
OOO GAZ Group Management Company. Since 2008 Mr. Odintsov is also a member of the Board
of Directors of OAO GOLAZ, OAO KAAZ and OAO Pavlovo Bus.
55
Mikhail Yurievich Postavnin
Education: higher
In 2003-2005 Mr. Postavnin was the Deputy General Director for Development of OOO
RusAvtobusProm. Since 2005 Mr. Postavnin was acting Deputy Chairman of the Management
Board and Director of Strategic Development of OOO GAZ Group Management Company. Mr.
Postavnin is also a member of the Board of Directors of OAO Pavlovo Bus.
Igor Georgievich Ryzhkov
Education: higher
In 2003-2004 Mr. Ryzhkov was the Security Director at OOO RusPromAuto, and in 2004-2005 held
the same position at OAO RusPromAuto. Since September 2005 Mr. Ryzhkov is Director for
Resource Protection at OOO GAZ Group Management Company.
Alexander Ivanovich Simachev
Education: higher
In 2004-2008 Mr. Simachev was the Director of the Legal Service at OOO ADV Marketing. Since
2008 Mr. Simachev is Director for Corporate and Legal Issues of OOO GAZ Group Management
Group. Mr. Simachev also holds the position of Director of GAZ International Limited since 2008.
Vadim Nikolaevich Sorokin
Education: higher
In 2003-2008 Mr. Sorokin was the General Director of ZAO Instrum-Rand. In 2008 Mr. Sorokin
held the position of First Deputy Chairman of the Management Board at OOO GAZ Group
Management Company.
56
Alexander Mikhailovich Titov
Education: higher
In 2003-2005 Mr. Titov was the Director for Development at OAO Russian Machines (formerly
OAO RusPromAuto). From 2005 to 2007 Mr. Titov worked as the Director for Development and
Restructuring of Production Facilities and Technology at OOO GAZ Group Management Company
(formerly OOO RusPromAuto Management Company). From 2007 to 2008 Mr. Titov was the
Director of the Auto Components Division of OOO GAZ Group Management Company. Since 2008
Mr. Titov worked as General Director of OOO GAZ Group Auto Components.
Yury Evgenievich Ushakov
Education: higher
In 2003-2004 Mr. Ushakov was the General Director of ZAO Geokhim, and in 2004 was the
Commercial Director of ZAO Minnesko Novosibirsk. From 2004 to 2005 Mr. Ushakov worked as
General Director of ZAO MC-Management and from 2005 to 2006 was Deputy CFO at ZAO
Geokhim. From 2006 to 2008 Mr. Ushakov was the Managing Director of OOO TZK GAZ as part
of OOO GAZ Group Management Company.
Vyacheslav Vyacheslavovich Shmatov
Education: higher
From 2003 to 2006 Mr. Shmatov held the position of Deputy General Director for Economics and
Finance of OAO GAZ, then in 2006 held the position of Deputy Managing Director - Director for
Economics and Finance of OAO GAZ. In 2007-2008 Mr. Shmatov was the Deputy Chairman of the
Management Board for Finance and Economics - CFO of OOO GAZ Group Management
Company. In 2008 Mr. Shmatov was appointed Director of the Light Commercial Vehicles Division
of OOO GAZ Group Management Company and Managing Director of OOO GAZ Group
Commercial Vehicles. Mr. Shmatov is also Director of GAZ International Limited.
57
System of internal controls
Internal control is a constant process performed at all levels of Group management. Its aim is to
reduce the risks taken, ensure that operations and transactions comply with legislative requirements,
and provide complete and reliable reports to shareholders and other interested parties.
The Audit Commission of OAO GAZ and the Internal Audit Service of OAO GAZ are responsible
for assessing the effectiveness of GAZ Group’s system of internal controls.
Audit Commission
The Audit Commission is a supervisory body that exercises internal control over financial and
business operations of OAO GAZ, its management bodies, divisions and services, branches and
representative offices.
In its activity the Audit Commission is governed by the laws of the Russian Federation, the Charter
of OAO GAZ, the Regulations “On the Audit Commission” and other internal Company documents
approved by the general meeting of shareholders related to the activity of the Audit Commission.
The Audit Commission performs its activity in the form of reviews: one mandatory review
(revision) of financial and business operations based on the results for the year, and unscheduled
reviews. Based on the results of the review of the Company’s financial and business operations, the
Audit Commission drafts an opinion confirming the reliability of the data contained in the
Company’s reports and other financial documents and information on any violations discovered.
The Audit Commission had the following members in 2008:
•
Natalia Vladimirovna Vasilieva (Chairperson);
•
Valery Yurievich Lepekhin;
•
Irina Viktorovna Smirenina.
Internal Audit Service
The Internal Audit Service of OOO GAZ Group Management Company was created to help
improve the effectiveness of internal control and risk management at OAO GAZ and the
subsidiaries of GAZ Group.
The Internal Audit Service performs internal audits and other audit-related tasks in Company
divisions and GAZ Group companies. In its activity the Internal Audit Service is governed by the
principles of independence, objectivity, competence and professionalism, as well as by the standards
for internal auditors established by the International Standards for the Professional Practice of
Internal Auditing and the Code of Ethics of the Institute of Internal Auditors.
The duties of the Internal Audit Service include:
•
performing audits of the effectiveness of the systems of internal control of the Company and
GAZ Group companies, and developing the appropriate recommendations based on the
results;
•
performing audits of the security and effectiveness of the information systems of the
Company and GAZ Group companies;
58
•
advising the executive management of the Company and GAZ Group companies during the
preparation of action plans (adjustments) based on the results of the audits performed, and
monitoring the execution of the action plans;
•
advising the executive management of the Company and GAZ Group companies on the
issues in the competence of the Internal Audit Service.
The Internal Audit Service is headed by the Director of the Internal Audit Service, who answers
administratively to the Chairman of the Management Board and operationally to the Audit and
Finance Committee, in order to ensure the independence and objectivity of the Service.
V.Yu. Lepekhin was Director of the Internal Audit Service of OOO GAZ Group Management
Company in 2008 (until 27 October 2008).
External auditor
In order to ensure the maximum level of objectivity and reliability of financial results OAO GAZ
brings in an external auditor to audit and endorse the annual financial statements.
The annual general meeting of shareholders of OAO GAZ, held on 27 June 2008, approved OOO
Rosexpertiza as OAO GAZ’s auditor. Based on the decision of the annual general meeting of
shareholders, audit services contract No. 1859-01/31/08/309/07 as of 18 September 2008 was signed
between OAO GAZ and OOO Rosexpertiza.
OOO Rosexpertiza did not provide non-audit or other services to GAZ Group over the course of the
past year.
59
Risk management
Systems of risk management and internal controls
Risk management and building of an effective system of internal controls are two of the priority
areas of corporate governance at the Group. Risks are managed by rules and regulations approved at
the level of OOO GAZ Group Management Company that are binding for all the Group’s
production divisions. This process covers all of the Company’s activity, and is aimed at identifying
and reducing the likelihood and impact of events which could have a negative effect on the
Company. These measures provide a reasonable guarantee that the strategic goals of GAZ Group
will be met.
Under the current highly volatile macroeconomic conditions, the Company is exposed to a multitude
of risks. They are the manifestation of processes and factors over which GAZ Group has little or no
control. Accordingly, careful monitoring of external opportunities and threats, effective assessment
thereof and risk management are still important components of GAZ Group’s strategy for effective
planning of the Company’s business activity.
Industry risks
The situation in the industries directly related to GAZ Group’s business has become much more
complicated in connection with the global economic crisis. This has already resulted in an
adjustment of development plans at all Group companies without exception, and has highlighted the
need for strategic decisions on restructuring of the Group’s business. The success of crisis
management measures depends to a great degree on the care taken to track market changes and to
quickly make adjustments.
Thus, it must be said that the Company’s financial and business operations are currently
significantly impacted by industry risks. The most significant industry risks include: risks related to
an overall drop in demand on the market of commercial vehicles in general and in its individual
segments; risks related to the fact that car loans and the leasing system are not available to most
potential buyers due to high interest rates and tension in the banking sector; risks of further
expansion of leading global players and Asian manufacturers on GAZ Group’s key sales markets;
and risks of obsolescence of production assets due to the shortage of funds for replacing fixed assets.
Country, regional and legal risks
As before, the most significant risks related to the political and economic situation in the country
and regions where the Group does business are a strengthening of competition on the part of world
automobile manufacturing majors in their regions of presence, a fall in GDP and the related
reduction in the overall demand for GAZ Group’s products.
Legal risks related to GAZ Group’s business are split into risks of changes in currency regulation,
customs control rules and changes to tax legislation. The set of legal risks includes risks associated
with a change in court practices on issues related to the company’s business which could have a
negative effect on its performance results, as well as the results of ongoing court cases to which the
Company is a party. Some of the most important legal risks related to the overall macroeconomic
situation are the risks related to an increase in the general level of social tension in the regions of
presence of the companies and interests of GAZ Group.
60
Financial risks
Financial risks remain some of the most serious risks for the company, considering the overall
uncertainty and the limitations placed on business by the crisis on the capital markets. Financial
risks include risks of fluctuations in interest rates and exchange rates, and risks of stock market
instability.
Interest rate risk
Changes in interest rates on the Russian and international markets due to the credit crisis and a
downturn in the liquidity of the banking system could seriously impact the cost of borrowings and
the terms for raising additional capital. GAZ Group does business in a capital-intensive industry, so
changes in the cost of borrowing could have a negative effect on the Company’s development.
Exchange rate risk
The company imports some of its materials and spare parts from European countries, North America
and Asia, and exports some of its finished products. Therefore, there is a chance that its profits will
suffer from the impact of changes in exchange rates on expected cash flows.
Risks of stock market fluctuations
There is the risk that GAZ Group’s shares will increase in value slower than similar shares on other
developing markets. The main reasons for this are the methods for their fair valuation and the
current liquidity level of the Russian market. There is also the risk of a drop in capital inflow due to
the global fall in liquidity, political risks, and the reevaluation of the development prospects of
markets, all of which could make it harder to raise cash to finance the Company’s investment
projects.
Report on the payment of declared (accrued) dividends on the company’s
shares
The annual general meeting of shareholders of OAO GAZ was held on 27 June 2008. A decision to
pay dividends for 2007 in the following amounts was taken at this meeting:
•
RUB 73.32 per preferred share in OAO GAZ by 31 December 2008;
•
RUB 55.20 per ordinary share in OAO GAZ by 31 December 2008.
The total amount of dividends on ordinary shares in OAO GAZ equaled RUB 1,022,318,365.80, and
on preferred shares – RUB 106,570,620.00. Thus, the total amount of dividends due and payable on
all shares in OAO GAZ (ordinary and preferred) equaled RUB 1,128,888,985.80.
Declared dividends on the issuer’s shares were not paid in full by the issuer. As at 31 December
2008 dividends in the amount of RUB 450,278,024.28 had not been paid.
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Equity capital
Charter and share capital
The largest shareholder in OAO GAZ as at 1 April 2009 was OAO Russian Machines, which holds
a 61.05% equity share in charter capital. The other 38.95% of charter capital is distributed as
follows:
• 7.29% of charter capital belongs to a 100% owned subsidiary of OAO GAZ – ZAO GAZreserve;
• 8.86% of charter capital belongs to another subsidiary of OAO GAZ – OAO Ural AZ;
• 22.80% of charter capital belongs to minority shareholders.
Of the shares belonging to minority shareholders, 29,771 ordinary shares (0.16% of all ordinary
shares) are in the ownership of a constituent subject of the Russian Federation and held by the
Ministry of State Property and Land Resources of Nizhny Novgorod oblast.
Structure of equity capital of OAO GAZ
OAO Russian Machines
22,64%
OAO AZ Ural
ZAO GAZ-reserve
0,16%
7,29%
61,05%
8,86%
Ministry of State Property and
Land Resources of
N.Novgorod oblast
Other minority shareholders
Stock market
During 2008 the principal trend on stock markets in Russia and worldwide was a rapid fall in the
share price of the majority of issuers as the result of the real estate crisis and a deepening global
financial crisis.
Thus, despite the upswing in the value of both ordinary and preferred shares in OAO GAZ in Q1
2008, by year end the price of the Company’s shares had fallen considerably.
62
OAO GAZ ordinary share price performance, USD, RTS
OAO GAZ preferred share price performance, USD, RTS
Source: RTS data.
63
Bond market
A bond issue of OOO GAZ-finance worth RUB 5 billion was placed on 14 February 2006. In
accordance with the issue documents, an offer with a deadline of 12 February 2009 was announced.
Due to the unfavorable situation which has taken shape on financial markets over the past few
months and the limited possibilities to attract bank loans, OOO GAZ-finance could not fulfill its
obligations under the offer and turned to investors with a proposal on restructuring.
GAZ Group and ZAO Raiffeisenbank, which is acting as the organizer and consultant on the
restructuring, reached an agreement with the owners of 80% of the bonds of OOO GAZ-finance
worth a total of RUB 3.94 billion. Based on the signed agreements, the Issuer performed a
proportional buyout of 10% of bonds from investors who had agreed to the restructuring terms.
The basic terms of the restructuring are:
1) The Issuer performs a proportional buyout of 10% of bonds from investors who had signed the
deal on restructuring. The remaining bonds of OAO GAZ will be bought back from investors
according to the following schedule: 15% of the issue in December 2009, 10% in March 2010, 20%
in both June and September 2010, and 25% in December 2010, according to the procedure stipulated
by the offer announced by OAO GAZ.
2) The coupon yield for the 7th through 10th coupon periods has been established at 18% per annum.
3) The Group has assumed additional responsibilities/restrictions on taking out new loans, issue of
loans to third parties, provision of guarantees, etc.
64
Sustainable development
GAZ Group is a conscientious employer and an active participant in the country’s socio-economic
life. By consistently integrating sustainable development principles into its operations, GAZ Group
is creating a foundation for long-term development and stable industry standing. Sustainable
development is an integral part of the Group’s strategy.
The Group’s main resource, which it is committed to retaining and expanding, is its highly qualified
employees. As a responsible employer, GAZ Group strives to guarantee its employees equal and
safe working conditions, and assumes additional responsibility for the well-being and comfort of its
employees.
GAZ Group maintains an active dialogue with its local communities, and is open for cooperation,
partnership and interaction. Unquestionably, the operations of a major automobile manufacturing
holding have a serious impact not only on the country’s economy, but on the environment as well.
For this reason, the Group’s priorities include building cars that meet today’s growing
environmental requirements, to reduce their negative environmental impact. Thus, the Group is
working actively to develop production of a new generation diesel engine which reduces hazardous
emissions 2,5 times, and PM emissions 18 times.
The Group also actively participates in the development of the areas of its presence, and the
implementation of significant economic and social programs.
GAZ Group is striving to ensure the high quality of its products for consumers in today’s changing
economic conditions. This is one of its unchanging strategic priorities.
Quality control
GAZ Group is constantly working to incorporate new technologies into production and to upgrade
and improve its product line, but the quality and reliability of the manufactured products remain an
unconditional priority and one of the main elements of the Group’s strategy. Despite the difficult
economic situation, GAZ Group companies took a number of measures in 2008 to improve product
quality: the mandatory shutdown of production in case of deviations from operating procedures,
reevaluation of operating procedures, and performance of inspections of operating procedures for
manufacture of products.
The successes achieved by Group companies in improving quality in 2008 were rated highly by the
local authorities. For example, in 2008 OAO Autodiesel (YaMZ) won the regional competition
“Best in Quality Assurance” (for Yaroslavl oblast). The enterprise continued the work on
implementing GAZ Group production system, the key instruments of which last year were:
optimization of flows, creation of working groups to resolve quality issues, work standardization
(balancing of workloads of operators) and TPM (independent servicing of equipment and
organization of flows), creation of testing areas, advanced training of personnel.
GAZ Group performs targeted work to improve the quality and reliability of products. A Quality
Control Program was adopted for the period 2008-2011, which envisages systematic work by GAZ
Group companies to implement the requirements of international automotive quality standard
ISO/TS 16949:2002. In autumn 2008 OAO Autodiesel (YaMZ) became one of the sites for GAZ
Group’s pilot project for implementation of a new quality control system. The program for 2009
65
envisages the implementation of elements of the standard at OOO GAZ Automobile Plant, OOO
PAZ, and OAO Autodiesel (YaMZ).
The implementation of the quality control system started with the development of quality control
services at the level of companies and divisions, which will make it possible not only to improve
supervision over the meeting of quality control requirements at the companies, but also to introduce
more detailed work with end consumers of products and dealers. Supply quality assurance services
(SQA) were created within OOO TZK GAZ and the divisions of GAZ Group. In addition, supply
quality conferences were held at the Trade and procurements company and several GAZ Group
companies.
New corporate procedures within the quality control system were also developed and implemented
in 2008: the 8D problem solving method, “Standard requirements on GAZ Group suppliers”,
“Certification of a supplier to GAZ Group companies”.
The following corporate projects were started under this program in 2008:
• Elimination of key problems during the warranty period;
• Customer satisfaction audit (CSA);
• Improving feedback from consumers.
The quality assessment of the manufactured products is performed based on a balanced system of
indicators, including a trial implementation at GAZ Group companies in 2008 of progressive IPTV
(incidents per 1,000 vehicles) quality indicators. Plans in 2009 include the implementation of IPTV
indicators at all GAZ Group companies.
The starting point for ensuring the required product quality level is the high level of qualifications of
Group employees. With this in mind, the Group has developed and is implementing a training
program for employees of the companies, divisions and the management company. Six new training
programs were developed in 2008 under the Quality Control System, and 996 employees (including
the top managers of GAZ Group) underwent training through these programs. In addition, four inhouse trainers were trained.
The Group works constantly with key groups of interested parties, to study consumer requirements,
comments and wishes. Quarterly conferences on quality were held for this purpose in 2008 at the
level of OAO GAZ. Service companies were also given a quality assessment survey of GAZ
automobiles based on the method for calculating the consumer satisfaction index developed by OOO
GAZ Group Commercial Automobiles.
GAZ Group places strict demands on the quality of products of suppliers. The Group has developed
certification requirements for suppliers, which stipulate certification of companies for compliance
with ISO 9001 international quality management system requirements, and plans to include
certification with international automotive standards ISO/TS 16949 in future. The Group’s plans to
call for all suppliers to undergo ISO/TS 16949 certification procedures by 2010, to guarantee the
high quality of products.
66
Average quality assessment of GAZelle and Sobol automobiles during 2008
4,0
3,5
3,2
2,9
3,1
3,0
body appearance
quality of interior
quality of assembly
quality of main
assemblies
manufactured in
house
quality of main
components
3,2
2,4
3,0
2,0
1,0
0,0
quality of
quality of automobile
construction of the
production
automobile
technology
Environmental protection
Environmental protection and mitigation of environmental impact are the basis for the Group’s
sustainable development and an object of close attention and investment. This is due to the fact that
both the production activity of a major automobile manufacturer and its end product have a
significant impact on the ecological balance and global climate changes. This places additional
responsibility on GAZ Group for preserving the environment in the regions of presence of its
companies for future generations.
In 2008 the Group’s environmental protection activity in its regions of presence was rated favorably
by independent experts – ANO Independent Environmental Rating Agency and the International
Social-Ecological Union. GAZ Group took 14th place out of the 3,000 largest companies in Russia
in the environmental rating, climbing nine places compared with the previous year. GAZ Group
maintained its leading positions in 2008 in the regional environmental ratings of various industries,
having been recognized as one of the three leading companies in this regard. The companies were
rated based on the level of transparency of their environmental reporting, overall use of water and
land, total waste water discharge, atmospheric emissions and waste, level of annual environmental
costs per employee, and rates of reduction of harmful environmental impact in 2007.
GAZ Group is constantly working to implement innovative environmentally friendly technologies,
use production wastes as secondary material resources, reduce environmental risks and implement
environmental management systems at its companies. From 2005 to 2008 GAZ Group companies
reduced the amount of their pollutants by 28%, and the amount of solid waste from production by
41%.
67
Changes in GAZ Group’s expenses on
environmental protection measures, RUB
million
Distribution of GAZ Group’s expenses on
environmental protection measures by expense
item, 2008
500,0
400,0
473,0
Protection of bodies of
w ater
35%
300,0
40%
Protection against air
pollution
200,0
Treatment of production
and consumer w astes
100,0
117,7
25%
0,0
2007
2008
The total costs of GAZ Group on environmental protection measures and measures to reduce its
environmental impact in 2008 equaled RUB 117.7 million. Most of the funds (40%) were spent on
protection and cleanup of bodies of water.
When organizing its environmental protection activity, GAZ Group is governed by the norms,
requirements and standards developed in the Russian Federation and those in effect on the
international level. The Group follows lean manufacturing rules, pursuant to which resource- and
energy-saving measures are implemented and regular scientific research is performed. Thanks to
these measures, the Group was able to cut its energy use in 2008 from 970.7 MW h to 857.8 MW h,
or by 13%.
Changes in energy use by GAZ Group, MW h
1 000,0
960,0
970,7
920,0
880,0
840,0
857,8
800,0
2007
2008
Owing to their large-scale environmental protection projects, Group companies managed to avoid
accidents at their environmental protection assets in 2008 and to reduce the amount of waste water
by 24.97%, the amount of pollutants issued with waste water by 28.68%, and wastes produced by
7.01%. The amount of environmental payments increased by 5.6%, from RUB 44.8 to 47.3 million.
The Group works together with state environmental protection agencies and public organizations.
OAO Autodiesel (YaMZ) participated in the Municipal Special-Purpose Program “Reducing the
Human Impact on the Environment in 2005-2008 and during the Period up to 2010”.
68
Atmosphere
Modern fuel-efficient engines make it possible for people to remain mobile while reducing the
negative impact on the environment. The installation of modern pollution control equipment, repair
of existing pollution equipment, and laboratory testing and inspection of emissions of pollutants into
the atmosphere in 2008 made it possible for Group companies to reduce atmospheric emissions from
13.8 to 11.7 thousand tonnes. The total costs on air protection measures equaled RUB 29.8 million.
Atmospheric emissions by GAZ Group, ‘000 t/year
14,0
13,0
13,8
12,0
11,7
11,0
10,0
2007
2008
In 2008 GAZ Group companies performed large-scale investment projects to reduce emissions of
pollutants into the atmosphere.
At OOO PAZ the spray painting production facilities were reconstructed and upgraded with a
modern paint line that releases 103.48 t/year less into the atmosphere and saves RUB 23.19
thousand.
The liquidation of boiler room No. 1 at OOO EZ Kovrovets enabled the Group to reduce overall
atmospheric emissions by 10.511 t/year.
The effect of transfer of stems from heated tools to cold solidifying mixtures (Cold-Box-Amin) in
the grey iron foundry shop of OAO Autodiesel (YaMZ) equaled 3.91 t/year less emissions of solid
waste and 6.96 t/year less emissions of gaseous pollutants.
The PBIV-30 gas purifying unit at foundry No. 7 of OAO GAZ reduced emissions by 0.759 t/year
alongside with the significant economical effect.
Water bodies
GAZ Group’s environmental policy stipulates economical and rational water use. The Group takes a
number of measures to minimize water consumption by Group companies without affecting
production needs: treatment facilities are being upgraded, recirculated water systems are being
introduced, and cutting edge equipment is being bought. A total of RUB 46.8 million was spent on
water protective measures in 2008, including RUB 45.1 million on upgrading of treatment facilities.
69
As a result, the environmental impact on surface bodies of water was eased through a reduction in
the amount of waste water discharged by nearly 25%, and a reduction of the concentration of
pollutants in waste water by nearly 29%.
Waste water discharge by GAZ Group,
‘000 m3
Pollutants discharged with waste water by GAZ
Group, ‘000 t/year
16,0
60,0
14,0
50,0
12,0
51,3
40,0
13,9
10,0
38,5
30,0
8,0
9,9
6,0
20,0
4,0
10,0
2,0
0,0
0,0
2007
2008
2007
2008
In 2008 Group companies performed a number of projects and work to reduce the amount of waste
water discharge in future.
At OAO Pavlovo Bus and OOO PAZ the return flow from the Parkerizing line and the thermal
workshop were rerouted to the recirculated water supply system of MGC, eliminating the discharge
of return flow into the sewer system or into the biological treatment facilities. The aeration system at
the biological treatment facilities was also upgraded.
OAO Autodiesel (YaMZ) reconstructed the offsite production waste water runoff treatment
facilities. At OAO UMZ a local recirculated water supply system from HFC was assembled and the
local recirculated water system of the compressor station was reconstructed. This made it possible to
reduce water consumption, water discharge, and discharge of pollutants, which in turn led to savings
of RUB 1.9 million.
The installation of a system to return 100% of waste water runoff to the system of recirculated water
supply at OAO ZZGT resulted in total annual savings from the time of installation of around RUB
1.4 million.
By installing modern waste water sanitation technologies and new treatment facilities, and by
switching them from an uninterrupted to a periodic work cycle, OAO GAZ reduced water
consumption and water discharge by 112 m3/day in 2008.
The ecological effect from the measures taken by OAO GAZ equaled 4.3718 t/year, and the
economic effect equaled RUB 752.39 thousand.
Work with production wastes
The reduction of production wastes is also an important element of GAZ Group’s environmental
policy. The use of state-of-the-art technology in the production process, construction of production
waste disposal sites, and upgrading and reconstruction of production facilities made it possible to
reduce the amount of wastes produced by 7% in 2008.
70
Production and utilization of wastes by GAZ Group, ‘000 t/year
800,0
700,0
600,0
500,0
400,0
300,0
200,0
100,0
0,0
690,9
6 44,4
4 66,3
455 ,6
2007
2008
Utilization of w as tes by the GAZ Group, '000 t/year
Produc tion of w astes by the GAZ Group, '000 t/year
The Group invested RUB 41 million in measures to reduce the negative environmental impact of
treatment and utilization of production wastes in 2008.
Employees
The main goal of GAZ Group’s human resources policy is to ensure equality and access of
employees to professional training and advancement, to guarantee safe and comfortable working
conditions, and to recruit and retain highly qualified personnel. The employees of GAZ Group are
an unquestionable asset, the main component of its successful operations on the market.
The Group takes a serious approach to planning of professional workforce requirements. Even in
difficult economic times, Group management tries to provide employees with retraining
opportunities and/or to move them to outsourcing arrangements.
Number of GAZ Group employees (persons)
120 000
118 000
118 387
116 000
114 000
112 000
110 000
108 000
112 314
110 000
106 000
104 000
2006
2007
2008
71
GAZ Group’s wage expenses, RUB billion
25
24,5
20
21,1
20,0
15
10
5
0
2006
2007
2008
GAZ Group employees by segment in 2008, %
Auto Components
6%
13%
Light Commercial Vehicles
20%
Pow ertrain
Passenger Cars
11%
11%
8%
Construction Equipment
Bus
4%
27%
Truck
Service Companies
72
GAZ Group employees by category in 2008 %
0,2%
0,6% 0,1%
Managers
9,5%
Technicians
15,0%
39,4%
Officials
Production personnel
0,4%
Auxiliary personnel
Non-production personnel
34,8%
External replacement
personnel
Employees working under civil
law contracts
GAZ Group is one of the largest employers in the Russian Federation. More than 112,000 people
worked at Group companies in 2008.
All companies have a collective bargaining agreement, concluded between the Group and
employees to ensure compliance with the norms of the Labor Code of the Russian Federation, the
Law of the Russian Federation “On Trade Unions, Their Rights and Operating Guarantees” and
other regulatory acts for a term of one to three years and approved at a company conference. The
collective bargaining agreements include the main workforce issues – ensuring the economic rights
and interests of employees, implementation of the human resources policy, occupational and
environmental safety, provision of concessions and guarantees to company employees, intragroup
workforce development, social security for pensioners. In 2008 the collective bargaining agreements
covered 110,000 employees and their family members.
Wages
The Group’s system of material incentives for employees is intended not only to retain key
specialists and promote their professional development, but also to resolve the strategic tasks facing
the Group.
GAZ Group guarantees its employees competitive wages. The wages of each Group employee are
determined by his/her qualifications, the level of difficulty of his/her work and working conditions,
the amount and quality of labor input, the personal contribution of the employee and the overall
results of the company’s production and economic activity.
Wage expenses increased by 16% in 2008, from RUB 21.1 billion to 24.5 billion.
Training and development
Initial training of employees, professional development and vocational training are important areas
of GAZ Group’s human resources work. More than RUB 60 million were spent on employee
training programs in 2008. Training programs gave 60,557 Group employees the opportunity to
improve their qualifications.
73
Number of GAZ Group employees that
underwent training
70 000
GAZ Group employee training costs, RUB ‘000
70 000
60 000
60 000
60 557
60 992
50 000
50 000
40 000
40 000
30 000
30 000
32 639
20 000
20 000
10 000
10 000
0
24 024
0
2007
2008
2007
2008
Training costs per GAZ Group employee, RUB/year
1 200
1 000
1 007
800
600
736
400
200
0
2007
2008
The Group’s ability to provide employees the chance to retrain for other jobs is especially important
in the current economic conditions. An advance training program is being implemented at all GAZ
Group companies. This program will enable the companies to maintain their human resources
potential in conditions of falling production, to improve the level of qualifications of employees, and
to provide employees for hard-to-fill occupations using in-house human resources.
Employees involved in the advance professional training programs are guaranteed to retain their
jobs, are given the chance to receive a second highly sought after profession and improve their
qualifications.
More than 7,000 GAZ Group employees will take part in the state retraining program in 2009 to
ensure employment despite the fall in production.
Social guarantees
GAZ Group provides its employees with an expanded social package, which includes non-state
pension coverage programs, health care services, and home financing.
The Group pays close attention to the social security of pensioners and veterans. They are given
targeted material assistance, holiday events, meetings and excursions are organized and financed,
cosmetic repairs are performed in the apartments of pensioners and veterans, discounted travel
vouchers to sanatoria, vacation hotels and resorts are issued.
74
The Group has set up a corporate-wide additional pension insurance program as a long-term
incentive instrument. During 2008 the amount of monthly contributions under additional pension
insurance programs equaled RUB 48.5 million at OAO GAZ, and RUB 5.4 million at OAO ZZGT.
Mandatory medical insurance is stipulated for all Group employees, contracts are concluded with
medical and preventative treatment institutions for outpatient care, preliminary and regular medical
examinations, and vaccination against epidemic illnesses. Sanatorium and health resort treatment is
organized for employees under the collective bargaining agreements, and the employment contracts
with employees of controlled companies stipulate voluntary medical insurance through the OSAO
Ingosstrakh insurance company.
Medical stations that provide first aid and seasonal physical therapy to employees working in
harmful or hazardous working conditions operate at the companies.
Payments for Voluntary Medical Insurance equaled RUB 22.2 million in 2008.
The Group provides supplemental social benefits to employees in the form of subsidies for food,
home financing, and payments related to difficult personal circumstances. The total payments for
2008 equaled RUB 266.6 million.
A mortgage program was implemented at the companies of the Bus Division: OOO Likino Bus;
OOO LiAZ (except for senior management, non-production personnel and replacement workers);
OAO Pavlovo Bus; OOO PAZ (RUB 5.7 million); the Powertrain Division: OAO Autodiesel
(YaMZ) (RUB 20 million); and the Truck Division (RUB 15 million).
Cooperation with the state authorities
GAZ Group builds its relations with the federal and regional state authorities and local government
authorities based on the principles of social responsibility, in accordance with existing legislative
and regulatory acts.
GAZ Group, which has companies in 10 Russian regions, places high priority on interaction and
cooperation with the administrations of the constituent subjects of the Russian Federation, to
improve the social climate in its regions of presence.
The administrations of the constituent subjects of the Russian Federation and municipalities,
security services, and state educational and health care institutions are key consumer groups of GAZ
Group’s automobiles. The companies’ products satisfy socially important public needs which ensure
the normal functioning of the infrastructure of the country’s population centers, the health and lives
of people, and the level of socio-economic development of the regions.
GAZ Group places special emphasis on participating in developing state programs to promote the
country’s automotive industry. Another important form of cooperation with the country’s top
executives and the representatives of the state executive authorities is the organization of visits by
officials to GAZ Group companies to look at the products being manufactured.
It should be noted that these measures are also a good source of feedback for the representatives of
the state executive authorities. During their visits to the companies and expositions they can study in
detail the technical and consumer specifications of the vehicles manufactured under government
contract, discuss the industry’s problems and development prospects, and get acquainted with the
working conditions and lives of company employees.
75
The Supervisory Board under the Board of Directors of OAO GAZ was created in 2008 for
constructive cooperation with the state executive authorities, R&D institutions, and industry and
professional organizations on improving the legislative framework, developing high-end technology,
and social policy in the automobile manufacturing industry.
GAZ Group’s social responsibility in interactions with the state executive authorities is exercised in
the form of public-private partnership.
Participation in the priority national Education and Health Care projects has become an important
component of the realization of public-private partnership for the company. GAZ Group companies
have performed critical work to improve the quality of the vehicles manufactured and to bring them
into complete compliance with safety requirements, which has allowed our companies to win
tenders on the supply of medical and school buses for state health care and educational institutions.
In 2008 GAZ Group continued its work to supply vehicles for implementation of the priority
national Education and Health Care projects.
With the worsening of the global economic crisis, which has manifested itself in a sharp decline in
the amount of production and job cuts, GAZ Group took part in a federal program aimed at relieving
tension on the job market in the constituent subjects of the Federation. The companies perform
measures under the federal advanced training program to allow them to ensure employment of
personnel despite the fall in production, and to improve the qualifications and competitive
advantages of employees on the job market. Training in 55 professions is provided at the Corporate
University of GAZ Group for the companies of OOO GAZ Automobile Plant.
Social responsibility to society
GAZ Group believes that cooperation with public institutions, support of public initiatives and direct
involvement in the work of non-governmental organizations are essential conditions for conducting
socially responsible business.
In addition to representatives of the state executive authorities, the Supervisory Board of OAO
GAZ, created in 2008 at the initiative of company management, also includes experts from the
scientific community and members of public organizations and trade unions.
GAZ Group is an associate member of public organizations that represent the interests of the
manufacturing sector, industry and entrepreneurship: The Russian Union of Industrialists and
Entrepreneurs (RUIE), the Association of Russian Motor Vehicle Manufacturers (OAR), the
Russian Engineering Union (SMR), the Chamber of Trade and Industry (TPP), the Nizhny
Novgorod Association of Industrialists and Entrepreneurs (NAPP), the Association of Automotive
Engineers (AAI), etc.
Company representatives are members of the management bodies of the aforementioned
organizations, actively participate in their work, contribute directly to the development of their lines
of business and preparation of key documents and decisions.
The Group takes an active part in the resolution of socio-economic problems in the regions of
presence of its companies. The Company supports the Avtozavod sports club Torpedo, its highly
professional sportsmen and the hockey “Torpedo-Nizhny Novgorod” team. Historically the team is
addressed with the reference to the plant, however nowadays it is the symbol of sports victory for
the whole region.
76
GAZ Group implements its own programs for sports development maintaining facilities of the
Torpedo Sports Club comprising such complex facilities as the Konovalenko Sports Palace, the
Sports Center with a swimming pool, the Hand Games Stadium, a skiing lodge and others. The
annual schedule of sport events includes competitions in various Olympic Winter and Summer
sports, 24 hour skiing marathon and relay races for the prizes established by the Avtozavodets
corporate newspaper, the international GAZ Half-Marathon. The Torpedo Ice-Hockey Team,
financially supported by GAZ Group, is a member of the Russian Premier Ice Hockey League.
Spectacular matches of the favorite team are popular both with the GAZ employees and Nizhny
Novgorod citizens. The Youth Sport School trains young hokey players instilling in them the love
for the big sport.
GAZ Group provides significant support to the non-commercial foundation “Voluntary Cause”
under the project “School PC” designed to create all the conditions required for the Russian
Federation teachers and pupils to master the IT and use them in the purposes of learning. Besides
computer hardware and licensed software, this project gives teachers an opportunity to study
specially designed software programs.
Currently the project is running in three regions: the Krasnodar Region, the Sverdlovsk Region and
the Avtozavodsky District of Nizhny Novgorod. Totally, the project involves 10 cities, 199 schools,
1 687 teachers and 38 025 pupils. The total number of supplied PC`s amounts to 1 687 for teachers
and 41 875 for pupils.
At the moment the construction of Saint Nikolas Church was renewed in the Avtozavodsky District
thanks to the support from the Voluntary Cause and GAZ Group. This church is not only an object
of architecture, it is also an embodiment of orthodox and cultural traditions of spiritual and ethic
development of the new generation.
GAZ Group is actively participating in solution of social and economical problems encountered by
the regions where GAZ Group enterprises are presented.
The employees of Ural Automobile Plant collected charitable contributions to provide material aid
to those affected by the humanitarian catastrophe in South Ossetia.
The Ural plant continued financing the construction of the Cathedral of the Baptism of Christ in
central Miass.
OAO AZ Ural Plant allocated funds to buy furniture for the children’s ward of municipal hospital
No. 4, for corporate assistance to the Miass branch of Southern Urals State University and to build a
playground in Miass.
OAO AZ Ural sponsors the Torpedo football club (third division, Ural-Western Siberia zone). OOO
GAZ Group Powertrain finances the Yaroslavich volleyball club, a member of the Premier League
of Russian volleyball.
In June 2008, in honor of Children’s Day, the Passenger Cars Division presented the Nizhny
Novgorod Krasnobakovsky orphanage with a GAZ-31105 Volga automobile.
In July 2009, GAZ Group presented the Saint Petersburg Mariinsky Theatre with 5 buses of various
GAZ brands – GOLAZ, REAL, CAVZ.
As part of Children’s Day, the directors of all GAZ Group companies also visited corporatesponsored child care centers and handed out gifts - sports equipment and school supplies.
77
Material assistance was also given to the Council of Veterans of the Automobile Plant Region of
Nizhny Novgorod for the New Year’s holidays, and gifts (food baskets, flowers, souvenirs) were
presented for the Victory Day.
78
Contact information
OAO GAZ
Address: Prospekt Lenina 88, Nizhny Novgorod 603004
Telephone: (831) 299-09-90
Fax: (831) 299-09-99
Information on the Management Company
Limited-Liability Company GAZ Group Management Company
Address: Prospekt Lenina 88, Nizhny Novgorod 603004
Telephone: (831) 299-09-90
Fax: (831) 299-09-99
79
Major transactions and interested-party transactions
Major transactions approved by the Board of Directors of OAO GAZ in 2008
The Company did not conclude transactions, the obligations under which equaled 10 percent or
more of the carrying value of the issuer’s assets in 2008.
Interested-party transactions approved by the Board of Directors of OAO GAZ
in 2008
The Company concluded more than 220 interested-party transactions in 2008 with subsidiaries of
GAZ Group. The transactions were not approved by the company’s management bodies, since all of
the transactions were concluded as part of the normal business activity of OAO GAZ. All the
transactions were concluded on market terms, and the minimum income from the transactions
exceeded the income that would have been made by depositing the money in the Company’s bank
accounts. If these transactions are challenged and deemed invalid, the parties will return to their
original state (prior to the conclusion of the transactions) without economic losses. The economic
benefit from the performance of the transactions is apparent, and states the evidence that neither the
interests of shareholders nor those of the parties to the transactions were infringed.
Information on transactions that were approved by the authorized body:
Transaction date: 1 October 2008.
Subject and other material terms of the transaction: assignment of the authorities of the single
executive body to the management company.
Parties to the transaction: the management company – OOO GAZ Group Management Company,
and the party transferring the duties of the single executive body - Open Joint-Stock Company GAZ.
Full and abbreviated name of the legal entity or full name of the individual recognized by Russian
law as an interested party to the transaction: OAO Russian Machines.
Ground(s) for this party being recognized as an interested party to the transaction: Open Joint-Stock
Company Russian Machines (OAO Russian Machines) owns an equity share of 20 percent or more
in the charter capital of OAO GAZ; OOO GAZ Group Management Company is an affiliate of
Open Joint-Stock Company Russian Machines (OAO Russian Machines) (part of the same group of
companies).
Amount of the transaction (in monetary terms and as a percentage of the carrying value of the
issuer’s assets as at the end of the last complete reporting period preceding the date of the
transaction): RUB 661 452 372 (six hundred sixty one million four hundred fifty two thousand three
hundred seventy two) rubles that makes 1,34 % of the carrying value of the company’s assets as at
30 September 2008.
Effective term of the agreement: 1 October 2008 to 30 September 2011.
Obligations under the transaction: currently being fulfilled.
80
Management body of the issuer that approved the transaction: The transaction was approved by
decision of the Board of Directors of OAO GAZ on 30 September 2008 (unnumbered Minutes).
Other information on the transaction, indicated at the discretion of the issuer: The decision on the
assignment of authorities was adopted by the annual general meeting of shareholders of Open JointStock Company GAZ on 27 June 2008.
81
Appendix
Consolidated financial statements for 2008
To shareholders of OAO “GAZ”
AUDIT REPORT
of independent auditing company OOO “ROSEXPERTIZA” on consolidated financial (accounting)
statements of Open Joint Stock Company “GAZ” for 2008
Auditors:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Name: Limited Liability Company “ROSEXPERTIZA”
Legal address: Mashi Poryvayevoy st. 11, 107078 Moscow, Russian Federation
Mailing address: Tikhvinsky per. 7, str. 3, 127055 Moscow, Russian Federation
Telephone (495) 721-38-83
fax (495) 721-38-94
E-mail: [email protected]
Internet: www.rosexpertiza,ru
License for performing auditing activity No. E000977, issued by the Ministry of Finance of the
Russian Federation on 25 June 2002, valid until 25 June 2012
Certificate of state registration of OOO “ROSEXPERTIZA” No. 183142, issued by Moscow
Registration Chamber on 23 September 1993
Certificate of making on 27 September 2002 of an entry in the Unified State Register of Legal
Entities on the legal entity, registered prior to 1 July 2002, under main state number
1027739273946.
Settlement account No. 40702810900000013033 with OJSC AKB “ROSBANK” Moscow,
correspondent account No. 30101810000000000256, BIK 044525256, INN 7708000473, KPP
770801001, OKPO 29926698, OKVED 74.12.2.
Branch of OOO “Rosexpertiza”, performing the audit:
Legal address: Tukhachevskogo st. 22, St. Petersburg, 195067
Mailing address: Bolshaya Moskovskaya st. 8/2, St. Petersburg, 191002
Telephone: (812) 335-95-90, 572-38-11, 572-38-12, fax 335-95-91, 572-38-15
E-mail: [email protected]
Contract for performing audit: No. 1859-01/6 dated 18.09.08
Participants in the audit:
Ivanova Nadezhda Fedorovna, Audit Director;
Demidova Tatiana Albertovna, Senior Manager;
Naimushin Yuri Alekseyevich, Lead Expert.
82
Audited entity:
•
•
•
•
•
Name: Open Joint Stock Company “GAZ”
Legal address: Lenina ave. 88, Nizhny Novgorod 603004
Mailing address: Lenina ave. 88, Nizhny Novgorod 603004
Telephone: (8312) 90-95-97, 90-82-10
Certificate of state registration of a legal entity with making an entry in the Unified State
Register of Legal Entities under No. 1025202265571
We audited the attached consolidated financial (accounting) statements of OAO “GAZ” for the
period from 01 January till 31 December 2008 inclusive. The consolidated financial (accounting)
statements consists of:
- accounting balance sheet;
- profit and loss statement;
- notes.
The above statements were prepared by the executive body of OAO “GAZ” based on Federal Law
of 21.11.96 No. 129-FZ "On Accounting", "Regulation on accounting and accounting reporting in
the Russian Federation", as approved by the Order of the Ministry of Finance of the Russian
Federation dated 29.07.98 No. 34n, "Accounting Regulation "Accounting Reporting of
Organization" PBU 4/99, as approved by the Order of the Ministry of Finance of the Russian
Federation dated 06.07.99 No. 43n, Order of the Ministry of Finance of the Russian Federation
dated 22.07.03 No. 67n "On forms of accounting reporting of organizations".
Preparation of the above statements is the responsibility of the executive body of OAO “GAZ”. Our
responsibility is to express an opinion on the fairness in all material respects of the above statements
and the conformity of the accounting procedure with the laws of the Russian Federation, based on
the audit performed.
We conducted the audit in accordance with Federal Law of 07.08.01 No. 119-FZ "On Auditing
Activity", Federal Law of 30.12.08 No. 307-FZ "On Auditing Activity", Federal Rules (standards)
of auditing (Decree of the Government of the Russian Federation of 23.09.02 No. 696 as amended
by the Decrees of the Government of the Russian Federation of 04.07.03 No. 405, of 07.10.04 No.
532, of 16.04.05 No. 228, of 25.08.06 No. 523, of 22.07.08 No. 557, of 19.11.08 No.863), as well as
internal company standards.
The audit was planned and conducted so as to obtain reasonable assurance that the consolidated
financial (accounting) statements contain no material misstatements. The audit was conducted on a
selective basis and included examining on a test basis evidence supporting the amounts and
disclosures in the consolidated financial (accounting) statements of information on the financial and
economic activity, assessment of compliance with the principles and rules of accounting used in
preparation of the consolidated financial (accounting) statements, consideration of the main
estimates, obtained by the management of the audited entity, as well as evaluation of the
consolidated financial (accounting) statements presentation. We believe that the performed audit
provides sufficient ground for us to express our opinion on the fairness of the consolidated financial
(accounting) statements and conformity of the accounting procedure with the laws of the Russian
Federation.
83
In our opinion, the consolidated financial (accounting) statements of OAO “GAZ”, consisting of the
accounting balance sheet, profit and loss statement and the notes, present fairly, in all material
respects, the financial standing as at 31 December 2008 and the results of financial and economic
activity over the period from 01 January till 31 December 2008 inclusive in accordance with the
requirements of the laws of the Russian Federation as regards the preparation of consolidated
financial (accounting) statements.
30 April 2009
Director of the Branch of OOO “Rosexpertiza”
in St. Petersburg
Pustoshny V.B.
(POA No. 8 of 11.01.09)
Audit Leader
Ivanova N.F.,
auditor's qualification Certificate No. 042996,
valid from 19.04.02 in perpetuity
84
Consolidated Balance Sheet
as at 31 December 2008
OAO 'GAZ'
Organization
Taxpayer's identification number
Type of activity
production of automobiles
Legal organization/ownership form: ОJSC
Unit of measurement: million Rubles
Address: Lenina ave, 88, Nizhny Novgorod, 603004
Form № 1 under OKUD
Date (Y,M,D)
under ОКPО
INN
under OKDP
1
I. NON-CURRENT ASSETS
Intangible assets
including:
Goodwill
Fixed assets
Construction in progress
Investment property
Long-term financial investments
including:
Investment in associates
Deferred tax assets
Patents
Other non-current assets
TOTAL for section I
II. CURRENT ASSETS
Inventories
including:
raw materials, commodities and other similar valuables
Livestock
Work in progress
finished products and goods for resale
goods shipped
expenses of future periods
other inventories and costs
Value-Added Tax on acquired assets
Accounts receivable (payments on which expected more than
12 months after reporting date)
Accounts receivable (payments on which expected less than
12 months after reporting date)
Short-term financial investments
Cash
Other current assets
TOTAL for section II
1
GRAND TOTAL (total of lines 190 + 290)
1
12
05744892
5200000046
34.10
47
31
16
under ОКОPF/ОКFS
under ОКЕI
Date of approval
Date of mailing
Assets
Codes
0710001
2008
385
14 April 2009
Line
code
2
110
At beginning of
reporting
year
3
At end of
reporting
period
4
144
145
147
150
190
22 359,5
22 063,1
23 673,4
6 194,4
127,6
11 104,7
159,5
334,9
16,4
1 129,6
64 940,5
21,0
2 020,0
13,0
1 660,7
57 438,6
210
17 549,1
23 608,1
211
212
213
214
215
216
217
220
4 796,4
2 867,3
8 002,3
301,6
1 581,5
1 896,6
7 412,2
0,2
3 033,8
11 407,2
132,9
1 620,2
1,5
1 776,4
230
344,8
222,0
240
250
260
270
290
300
17 445,8
6 931,8
1 571,6
170,5
45 910,2
110 850,7
21 323,2
9 336,2
1 737,7
855,6
58 859,2
116 297,8
113
120
130
135
140
20 654,3
20 318,7
23 306,5
8 553,3
523,3
707,5
85
Liabilities
1
III. CAPITAL AND RESERVES
Share capital
Treasury shares
Additional capital
Reserve capital
Social sphere fund
Ear-marked financing and receipts
Retained earnings
Change in capital of an associate
TOTAL for section III
Goodwill
Minority interest
IV. LONG-TERM LIABILITIES
Loans and borrowings
Deferred tax liability
Other long-term liabilities
TOTAL for section IV
V. SHORT-TERM LIABILITIES
Loans and borrowings
Accounts payable
Dividends payable
Income of future periods
Provisions
Other short-term liabilities
TOTAL for section V
GRAND TOTAL (total of lines 490 + 491 + 492 +
Line
code
2
At beginning of
reporting
year
3
At end of
reporting
period
4
410
411
420
430
440
450
470
480
490
491
492
20,0
43 446,2
51,8
13 605,0
57 123,0
1 806,9
3 532,9
20,0
(7 318,3)
44 363,4
219,4
2 909,0
40 193,5
2 879,1
3 382,5
1
510
515
520
590
8 611,9
1 600,9
176,2
10 389,0
9 167,5
985,6
980,8
11 133,9
1
1
610
620
630
640
650
660
690
700
17 638,8
19 324,5
133,7
47,8
850,5
3,6
37 998,9
110 850,7
34 297,4
22 599,0
389,0
47,8
1 375,5
0,1
58 708,8
116 297,8
Line
code
2
910
915
At beginning of
reporting
year*
3
29 745,1
70,1
At end of
reporting
period
4
29 281,5
87,3
920
921
1 592,1
7,5
1 914,4
14,2
940
950
960
970
980
990
991
993
995
996
997
999
887,2
488,1
26 918,7
11,4
0,8
4,0
66,4
4,5
650,2
79,7
7,7
743,4
306,1
43 552,7
12,3
77,5
11,8
4,2
73,7
3,3
956,2
121,9
38,2
1
Statement of assets on off-balance accounts
Name of item
1
Leased fixed assets (001)
Written-off fixed assets valued under RUR 10 K
Goods and materials accepted for
custody (002)
Materials accepted for processing
Write-off of debt of insolvent
debtors (007)
Security of liabilities and payments received (008)
Security of liabilities and payments granted (009)
Depreciation of fixed assets
Intangible assets received for use
Fixtures and fittings
Limited issue forms
Fixed assets leased out
Depreciation of land improvement facilities
Tangible assets in operation
Goods and materials transferred to custody
Goods and materials meeting the criteria for booking as fixed assets
*Balances as at 31.12.2007 were adjusted
Deputy Managing Director Director of Economics and Finance
of OAO 'GAZ'
Director of Accounting Directorate
OOO 'GAZ Group Consulting Center'
А.А.Mozgovaya
Т.М.Chernova
86
Consolidated Profit and Loss Statement
for
Codes
0710002
12
05744892
5200000046
34.10
2008
Organization
OAO 'GAZ '
Taxpayer's identification number
production of automobiles
Type of activity
Legal organization/ownership form: OJSC
Unit of measurement: million Rubles
Address: Lenina ave, 88, Nizhny Novgorod, 603004
Form No.2 under OKUD
Date (Y,M,D)
under OKPO
INN
under OKDP
2008
385
Date of approval
Date of mailing
Name of item
1
Income and expenses from ordinary activities
Revenue (net) from sale of products, work, services
Cost of sold products, work, services
Gross profit
Selling expenses
Administrative expenses
Profit (loss) from sales
Other income and expenses
Interest receivable
Interest payable
Income from participation in other organizations
Other income
Other expenses
Share of profit (loss) of associates
Profit (loss) before tax
Deferred tax assets
Deferred tax liabilities
Current profit tax
Compulsory payments to budget
Write-off of deferred tax liabilities
Write-off of deferred tax assets
Minority interest
Net profit (loss) of reporting period
Permanent tax liabilities (assets)
Deputy Managing Director Director of Economics and Finance
of OAO 'GAZ'
Director of Accounting Directorate
OOO 'GAZ Group Consulting Center'
16
47
under OKOPF/OKFS
under OKEI
31
14 April 2009
Code For the reporting For similar
period
period in the
of
line
2
TOTAL
previous year
3
4
10
20
29
30
40
50
146 231,4
(124 793,5)
21 437,9
(6 940,7)
(9 480,4)
5 016,8
157 516,4
(128 722,8)
28 793,6
(6 432,1)
(8 592,5)
13 769,0
60
70
80
90
100
131
140
141
142
150
151
152
153
165
190
200
622,7
(3 422,1)
20 945,0
(31 706,5)
(8,6)
(8 552,7)
1 677,7
642,2
(1 712,6)
(210,9)
17,1
(31,8)
(20,5)
(8 191,5)
2 326,3
221,7
(1 633,5)
12 117,9
(14 597,5)
19,9
9 897,5
98,0
(936,1)
(3 942,3)
(543,4)
35,9
(6,5)
(517,4)
4 085,7
411,5
А.А.Mozgovaya
Т.М.Chernova
87

GAZ Group Annual Report 2008

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