15.04.2002
On the road for strategic development

Not so long ago in Moscow the authoritative European organization the Economist Group held the Third Russia Strategy Roundtable with the main topic “The prospects for increasing stability and profits”. Issues of integrating Russia into the world financial system and investment prospects were discussed at this representative international conference. The Minister of Finances of the Russian Federation Alexey Kudrin, Deputy Minister of Economic Development and Trade of the Russian Federation Arkadiy Dvorkovich, Deputy Chairman of the Customs Committee Alexey Kaulbars, Russian and foreign businessmen — Oleg Deripaska, Sibirsky Aluminiy, Nenad Popovic, Electroprominvest, Steven Musbugger, Earnst & Young and others took active part in the discussions at the forum.
We asked the Chairman of the Board of Directors, Doctor of Economic Sciences Nenad Popovic to share his thoughts and insights about the international round table and the role of Russian business in the investment processes going on in the national economy.

Q: Mr. Popovic, the Electroprominvest holding not only takes active part in the discussions about Russia’s development strategy at this roundtable but is also one of the sponsors of this high-profile forum of Russian and foreign business elite. What does this event mean for you?

A: The current business forum has brought together top executives of leading Russian and foreign companies that actively work in this country to share experience and opinions on the most crucial strategic questions of business development. The analysis of the current situation of the Russian economy presented by the experts of the Economist Group was of great interest. They believe Russia is a very prospective country for investments despite all the difficulties of development.

That is why for us it is first of all a perfect opportunity for direct interaction with our colleagues, leading experts, government representatives. Information from government officials responsible for economy, discussions with executives of leading Russian and foreign companies about the current events and the overall economic situation in Russia always has high practical value for the business and specifically for our company that cooperates with major local and foreign companies.An international conferences on a high level like this always become a major event for the business elite of leading Western countries. In this context the sponsorship of such events could be viewed as an honorary privilege.

Q: And what are the prospects for business development in Russia from the point of view of a participant of the process?

A: In the last year and a half the volume of the national product in Russia is constantly growing. This is a positive factor since the Russian economy is switching from just exporting raw materials to exporting products with high added value.

I myself, as a top manager of a large electrotechnical holding look to the future with optimism because the free market in Russia is in its development stage and has great unused potential for business in all regions and not only Moscow.

We are launching wide-scale projects on Sakhalin in the field of oil and gas development and a complex program for developing the energy system in the Sakhalin region. With this goal we have established a representative office in Yuzhno-Sakhalinsk. It, in particular, will be responsible for complex supplies of electrotechnical and resource-saving equipment, including automated process control systems to Sakhalin enterprises.

We actively develop cooperation with RAO UES and other energy systems. There are a lot of new projects in this area.

A number of hotel and business center projects is underway. One of the projects is unique to Russia. We are working on creating an artificial amusement island Yugra in the Black Sea near Tuapse. Our customer is the administration of Khanty-Mansiisk.

The project envisions the design and construction of a hotel and recreation center in the Black Sea that will include two hotels, a business center, a congress center, an artificial island with an aqua park, a yacht club and a helicopter field, a kids park.

Design and construction for a number of other large hotel and business complexes, including a modern business center in Cheboksary, the capital of Chuvashia, a sport base and six McDonald’s restaurants is underway.

Q: Your company developed together with the new national economy. All difficulties and hardships of Russian business you experienced yourself. What events were of most significance for you?

A: First of all, the creation of the Electroprominvest holding itself and process of uniting a number of leading and prospective companies in the electrotechnical industry, instrument-making and technologically related industries.

Today the holding brings together more than 20 plants and companies that employ approximately 7,000 people. Its member-companies include the all-Russian Research Institute of Relay Protection (VNIIR), the Electronics and Mechanics Plant (ZEIM), Stroienergoservis & Co that provides turnkey construction of substations and other energy sites, Marposadkabel, manufacturing and construction companies EGSK-Stroi, Stroiuniversalkomplekt, Harvinter, Energoprom-Engineering, ZEIM-ESKO, Electroprominvest-Sakhalin, EPI Automation, AIM consulting.

For example, VNIIR is a major research and development center. Practically all the developments in the field of relay protection and malfunction-proof automatics belong to its specialists. Its most diverse patent file contains more than 230,000 descriptions.

ZEiM is a leading manufacturer of a range of components for automatic process control systems.

Electroprominvest-Sakhalin is the consortium leader of the Sakhalin Development Group that was formed to participate in the development of oil and gas fields on the Sakhalin island and provide local presence for the project managers.

EPI Automation provides design, system integration, system engineering, programming, supplies, installation, commissioning, warranty and post-warranty services of equipment and automation systems. Engineering and construction companies of the holding are dynamically developing as well.

In a relatively short period of time we were able to implement new technologies, increase management and production effectiveness. Product quality has improved. We expanded product variety and markets. This allows us to pursue a complex approach in addressing the needs of our clients. Recently the holding has joined the ABS Holdings international group.

As a result the authoritative Company business weekly that monitors the activities of Russian and foreign companies named the Electroprominvest holding Company of the Year in 2001 in the category for best industrial applications manufacturer.

Q: What are the main products and services that Electroprominvest offers in the Russian and foreign markets?

A: One of the main areas of the holding’s activities is the production of a wide variety of automated process control systems developed taking into account the specific needs of the clients. This is first of all, energy-saving equipment, automated technological process control systems, drives, relays and other electrotechnical equipment for protection and control systems.

We build turnkey electric substations and other energy sites. We develop and produce corporate information management systems, automation and process control systems. The holding develops and implements energy-saving equipment for different industries..

Our member-companies have ample experience in the area of construction services in the public, administrative and industrial construction. We have our own technical and production base and are able to provide such services on a turnkey basis.

Q: Who are your main clients and partners?

A: We have customers both in Russia and abroad. Our service and sales network that includes more than 40 companies covers our country, Ukraine, Belorus, Latvia. The holding has offices and actively develops business ties in the USA, Central and Eastern Europe and the Balkans. We strive to develop our relations with customers on a long-term and partnership basis.

Currently the holding is successfully establishing ties for strategic partnership with major Russian companies such as RAO UES, Gazprom, MOSENERGO, Yukos, Silovie Machini, Tyazhpromexport, Norilsk Nickel and others.

As a result last year the holding completed joint projects with many major Russian companies in the field of power energy and the oil and gas industry and the overall sales volume in 2001 exceeded $100 mln.

This figure reflects both the dynamics of our growth and the capacity of the Russian market for the products and services that we provide. Our cooperation with Mosenergo can serve as a prime example. In the last few years a large number of its substations were reconstructed and modernized by companies of the Electroprominvest holding.

Q: The Russian economy is growing. How do you see your holding in three years?

A: The holding expects a considerable growth in orders, profits, an expansion of its production, scientific, research and design base, a rise in exports.
We are very optimistic about our future. Life itself has proven that the creation of such holdings as ours is a sure way to revitalize and develop key sectors of the Russian economy.

The Profile magazine, #15, April 15 2002 / Alexey Vasiliev