Gun and ammunition manufacturers have found a common goal
Rostec is creating a new shooting holding
The new Rostec holding, which will include the small arms manufacturer TsNIITOCHMASH and the developer of cartridge lines KBAL named after. Koshkin, will be headed by the former head of Tractor Plants Albert Bakov. He needs to triple his revenue
Albert Bakov and Sergei Chemezov (center from left to right) (Photo: Mikhail Metzel / TASS)
Machine guns and cartridges
Rostec will unite the Central Research Institute of Precision Engineering (TSNIITOCHMASH), which develops and produces small arms and ammunition, and the Design Bureau of Automatic Lines (KBAL) named after. L.N. Koshkin, which creates equipment for producing cartridges; The structure will be headed by the son-in-law of director Nikita Mikhalkov, former co-owner and general director of Tractor Plants Albert Bakov. A source in the military-industrial complex told RBC about this; the information was confirmed by the press service of the Rostec state corporation, which owns both enterprises.
“The decision was made by the board of the state corporation,” Rostec added.
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The transfer of KBAL shares to the authorized capital of TsNIITOCHMASH will be completed before the end of the current half of the year, the press service of the Institute of Mechanical Engineering told RBC. Today the enterprise is the sole executive body - the managing organization of KBAL named after. Koshkin and carries out trust management of his assets (80% of voting shares), it follows from the SPARK database.
Among the developments of TsNIITOCHMASH are the “Val” assault rifle and the “Vintorez” sniper rifle intended for special forces units, weapons for underwater shooting and equipment for military personnel, in particular the “Ratnik” kit, mortar and artillery systems, control systems for anti-tank missile systems, etc. KBAL named after. Koshkina creates equipment for the production of ammunition for small arms.
The main reason for the merger is the need to consolidate scientific and production resources, TsNIITOCHMASH emphasized. “This is necessary to create a modern engineering center both in the interests of the development of the small arms and cartridge industry, and for the production of civilian products,” explained a representative of the enterprise. Under the leadership of TsNIITOCHMASH, the research and production facilities of KBAL are already being used “as a platform for the development of engineering competencies.”
Society
How billions were embezzled to build a cartridge factory in Venezuela
KBAL will be the central site for the production of high-precision and conventional ammunition created by TsNIITOCHMASH engineers. In addition, the company is preparing for the production of local treatment facilities and technological lines for processing household waste.
Venezuelan case
Former general director of KBAL named after. L.N. Koshkin Nikolay Maslyaev became a defendant in a criminal case of embezzlement on an especially large scale (Part 4 of Article 160 of the Criminal Code, up to ten years in prison) during the execution of a multi-billion dollar contract for the construction of weapons factories in Venezuela. He was detained in November 2020 and in 2017 sentenced to four years in prison for embezzlement of 7.5 million rubles.
In August last year, it became known about a second criminal case against Maslyaev. According to the current management of KBAL, the damage in this case may exceed 150 million rubles. The decision to contact law enforcement agencies to investigate the misuse of funds received under a contract with Venezuela was made by the board of directors after an audit.
Tripling revenue
The united holding structure expects to increase revenue to 12 billion rubles by 2025, in particular through investment programs, two sources familiar with Rostec’s plans to reform the ammunition and small arms industry told RBC. “The investment program is currently in the process of approval; it is too early to talk about the final investor. The decision will be made in April-May,” they explained.
TsNIITOCHMASH and KBAL named after. Koshkina are the city-forming enterprises of Klimovsk (a former city in the Moscow region, now part of Podolsk. - RBC). At the end of 2020, the revenue of the former amounted to 3.9 billion rubles, net profit - 254 million rubles. For the same period, KBAL’s revenue figure was about 214 million rubles, and its net profit was 1.4 million rubles, as follows from the SPARK database.
A prototype and prototype (from right to left) of a promising new generation of combat equipment of the “Warrior” type developed by the Federal State Unitary Enterprise “Central Scientific Research Institute of Precision Engineering” (TSNIITOCHMASH) at the opening of the international military-technical forum “Army-2018” (Photo: Vladislav Karpov / TASS )
The merger of companies will not entail staff reductions, the press service of TsNIITOCHMASH said, clarifying that the reform “will contribute to the growth of order books and, consequently, an increase in the level of employees’ wages.”
Who will head the holding
In July 2020, 56-year-old Albert Bakov, husband of actress Anna Mikhalkova, was appointed general director of TsNIITOCHMASH.
He was born in Pyatigorsk, graduated from the Institute of Asian and African Countries with a degree in international economic relations. In 2001–2002, he served as deputy head of the administration of the Ulyanovsk region and headed the regional representative office under the Russian government.
From 2006 to 2020, Bakov was the general director and co-owner of the Tractor Plants concern. However, he sold his share (20%) to pay off debts to banks. Due to the enterprise’s debts, Bakov found himself on the verge of personal bankruptcy.
Last September, the Moscow Arbitration Court declared Bakov bankrupt, but the 9th Court of Appeal ruled to overturn this decision, since he was not given the opportunity to restructure his debts. Industrial director of Rostec Sergei Abramov told RBC that Bakov’s bankruptcy could stop the deal approved by VEB to restructure the company’s debts. As of September 2018, the debts of Tractor Plants exceeded 100 billion rubles, of which about 85 billion rubles. were in debt to VEB.
Problems in the ammunition market
The ammunition production industry has long been in need of modernization, says Andrey Frolov, editor-in-chief of the Arms Export magazine. “In certain items, Russia lags behind the world’s leading manufacturers, which, in the context of sanctions and the closure of Western markets, significantly complicates the situation of domestic factories producing ammunition for small arms,” he believes.
For modernization, equipment plays a key role, he noted.
Despite the problems with the production of high-quality cartridges, there will be no investment in the shooting industry in the coming years, since weapons legislation is constantly becoming stricter, says reserve colonel Viktor Murakhovsky, editor-in-chief of Arsenal of the Fatherland magazine.
The main products of KBAL are lines for the production of cartridges for small arms. “Such lines are needed for the mass production of millions and billions of cartridges. And the Russian market for cartridges for rifled weapons is very small,” the expert notes. To justify the investment, we need access to the markets of countries where small arms are permitted for individual use. “The largest markets are the USA, some countries in South America and Europe. However, under sanctions, these markets are closed,” he explains.
But modernization of the cartridge production industry is necessary due to the fact that the Ministry of Defense requires a transition to new models of cartridges. This is only possible by updating the equipment, says Murakhovsky. He also predicts that “there will be investments, but most likely from the state.”
