ГО 2014 для web3 engoeztlt.ru/uploads/files/GO-2014-dlya-web3_eng.pdfBUILDING THE FUTURE ANNUAL REPORT 2014 JSC «SEZ «TOGLIATTI» RUSSIAN FEDERATION 445051 TOGLIATTI, FRUNZE

BUILDING THE FUTURE

ANNUALREPORT 2014

JSC «SEZ «TOGLIATTI»

RUSSIAN FEDERATION 445051

TOGLIATTI, FRUNZE STR. 8, OFFICE 508

TEL. +7 (8482) 555 179 / FAX. +7 (8482) 555 177

[email protected]

WWW.OEZTOGLIATTI.RU

CONTENTS

SPECIAL ECONOMIC ZONES IN RUSSIA

1.1. MANAGING AUTHORITIES

1.2. TYPES OF SPECIAL ECONOMIC ZONES

1.3. ADVANTAGES FOR INVESTORS

DEVELOPMENT OF SEZ «TOGLIATTI»

2.1. SEZ «TOGLIATTI» IN FIGURES

2.2. CONSTRUCTION OF INFRASTRUCTURE

SEZ «TOGLIATTI» TODAY

3.1. LOCATION OF SEZ RESIDENTS

3.2 . RESIDENTS OF SEZ

SEZ RESIDENTS ABOUT THE PROJECT

PROJECT TEAM

YEAR IN REVIEW, DEVELOPMENT PROSPECTS.INTERVIEW WITH ALEXEY PAKHOMENKO

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ANNUAL REPORT 2014 SPECIAL ECONOMIC ZONES IN RUSSIA SPECIAL ECONOMIC ZONES IN RUSSIA ANNUAL REPORT 2014

SPECIAL ECONOMICZONES IN RUSSIA

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MINISTRY OF ECONOMIC DEVELOPMENTOF THE RUSSIAN FEDERATION

THE SAMARA REGIONGOVERNMENT

The territory of the special economic zones provides favorable investment environment, stable and transparent mode of business activity. The government ensures comfortable conditions for individual entrepreneurs and commercial organizations which are residents

of SEZ, by providing tax-, customs – and administrative preferences and building of engineering-, transport- and other infrastructures of SEZ at the expense

of budget means.

Thus, the special economic zones are one of the most important and most perspective tools for development of certain regions of the country and of economic branches. This tool can be successfully used to achieve state aims and targets in the field of social–economic

development of the Russian Federation.

Deputy Minister of Economic Development of the Russian FederationAlexander Tsybulskiy

The development of the SEZ «Togliatti» meets the demands set for us by the President of Russia Vladimir Vladimirovich Putin, including the creation of 25 million high–tech work places. Today there are over two thousand permanent

and temporary work places in the special economic zone; eventuallyin 2024 this number can exceed 20 thousand.

The GovernorNikolay Merkushkin


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1.1. MANAGING AUTHORITIES

RUSSEZ – is a federal network of special economic zones, the development of which is guided by the managing company OJSC «SEZ». The government is its main shareholder. The project is realized under the auspices of the Ministry of Economic Develop-ment of the Russian Federation.

The OJSC «SEZ» supervises 28 special economic zones.

The joint-stock company was established in 2006. 387 companies have been attracted into the special economic zones of Russia, 73 of them have foreign incorporators. Among them are such transna-tional giants as General Motors, Armstrong, Yokohama, Air Liquide, Bekaert, Rockwool, Novartis, Nokia Siemens Networks and etc.

The volume of investments declared by residents for the end of 2014, has exceeded 500 bln Rub., more than 130 bln Rub. of these have been invested into projects.

The Special Economic Zone – is a part of the territory of the Russian Federation, defined by the Government of the Russian Federation and that has a special procedure for business develop-ment, and where the privilege of a free customs zone is available. Its activity is regulated by the Federal law № 116-FZ approved on July 22, 2005 «On Special Economic Zones of the Russian Federa-tion». The powers of normative and legal regulation, creation and administration over the economic zones are given to the Ministry of Economic Development of the Russian Federation. Within its structure the Department of special economic zones, develop-ment projects for regions and monocities has been created.

Ministry of the Economic Development of the Russian Federation (Department of special economic zones, development projects for regions and monocities)

OJSC «Special Economic Zones» (OJSC «SEZ»)

Constituent entities of the Russian Federation

The activity of the special economic zones is ensured by:

SEZ «Togliatti» is one of the most dynamically developing special economic zones in Russia. This year significant work on the attraction of investors

whose work is not related to the automobile industry was carried out. This solves the problem of Togliatti being a monocity and helps to diversify

the economy.

Department of SEZ, development projects for regionsand monocities of Ministry of Economic Development of the Russian Federation

Deputy Director of the Department, member of the Bord of Directorsof JSC «SEZ «Togliatti»

Elmira Akhmeeva This year has become very significant for the project SEZ «Togliatti»: the first production was started up at the site. It is noteworthy that

the pioneer – LLC «Nobel Automotive Rusya» - is one of the world’s leaders in automobile production. I think we are moving in the right direction

and together we will make great progress.

OJSC «SEZ»General DirectorVitaliy Milyavskiy

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1.2. TYPES OF SPECIAL ECONOMIC ZONES

This type involves the allocation of territory in the big industrial regions of the country. Proximity to the base of resources for production, access to ready built infrastructure and transport arteries are only the main advantage.

INDUSTRIAL ZONES

Having its locations in the regions of Russia which are picturesque and popular among tourists, the special economic zones of the touristic type offer favorable conditions for the foundation of touristic, sport, recreational and other types of business.

TOURIST ZONES PORT AND LOGISTIC ZONES

The main areas of this SEZ type are allocated in the biggest research and educational centers which have a rich educational heritage and respected research schools. This offers great potential for innovative business development, manufacturing of science intensive products and its delivery to the Russian and international markets.

INNOVATION ZONES

Having its location in close proximity to the main transport routes, logistic SEZ can become the site for the initiation of shipbuilding and ship repair activities, provision of logistic services, as well as become a base for new routes.

SEZ «SOVIET HARBOUR»

SEZ «BAIKAL HARBOR»

SEZ «RUSSIAN ISLAND»

SEZ «SAINT–PETERSBURG»

SEZ «MURMANSK»

SEZ «DUBNA»

SEZ «MOGLINO»

SEZ «LUDINOVO»

SEZ «TOMSK»

SEZ «DOLINA ALTAI»

SEZ «TOGLIATTI»

SEZ «ULYANOVSK–EASTERN»

HEALTH RESORTSOF THE NORTH CAUCASUS

SEZ «ALABUGA»SEZ «LIPETSK»


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The investors are provided with exclusive conditions for business development on the territory of SEZ. Preferences and privileges are regulated by the federal legislation and regional regulations.

1.3.ADVANTAGESFOR INVESTORS

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NECESSARY INFRASTRUCTUREON PRIVILEGED TERMS

STATE GUARANTEEOF THE RUSSIAN FEDERATION

TAX PRIVILEGES TRANSPARENT MANAGEMENT SYSTEM

FREE CUSTOMS ZONESPECIAL ADMINISTRATIVE REGIME ACCESS TO QUALIFIED HUMAN RESOURCES

www.economy.gov.ru www.russez.ru


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DEVELOPMENTOF SEZ «TOGLIATTI»

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ANNUAL REPORT 2014 DEVELOPMENT OF SEZ «TOGLIATTI» DEVELOPMENT OF SEZ «TOGLIATTI» ANNUAL REPORT 2014

2.1. SEZ «TOGLIATTI» IN FIGURES

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DECLARED INVESTMENTS IN THE DEVELOPMENTOF SEZ «TOGLIATTI»

NUMBER OF RESIDENTS*

Establishment of SEZ «Togliatti» according to resolution of the Government of the Russian Federation

2010August 12

2012 November 2

The first pile is hammeredin the SEZ «Togliatti»

Federal budgetPrivate financing of energy supply companiesSamara region budget

2011 – 3

2012 – 7

2013 – 13

2014 – 16

VOLUME OF REALIZED INVESTMENTSBY THE RESIDENTS, MLN RUB.*CUMULATIVE TOTAL

CUMULATIVE TOTAL

2011 – 3,43

2012 – 41,69

2013 – 350,54

2014 – 3 460

COST OF WORKS DONE ON CONSTRUCTIONOF SEZ INFRASTRUCTURE, MLN RUB.

53,1 %

5,7 %

41,2 %13,6BLN RUB.

SEZ «TOGLIATTI» IS AN EFFECTIVE INSTRUMENT OF PRIVATE–STATE PARTNERSHIP

1 RUB. 1,35 RUB.

STATEINVESTMENTS

Taking into consideration occupation of 1/3 of site

PRIVATEINVESTMENTS

* according to concluded Agreements on activity performance with SEZ residents

VOLUME OF REALIZED STATE BUDGET INVESTMENTS IN SEZ, MLN RUB.

BUDGET SOURCES

NON-BUDGET (PRIVATE) SOURCES

Companies – residents of SEZ Power supply organizations

2 682 mln Rub. (39,5%)

3 905 mln Rub.

2 895 mln Rub.

2014August 12

Test launch of the firstproduction – LLC «Nobel Automotive Rusya»

2011 – 58 2012 – 510 2013 – 1 819 2014 – 2 895

100%6 800 mln Rub.

213 mln Rub. (3,1%)

3 460 mln Rub. (50,9%)

Federal budget Samara region budget

445 mln Rub. (6,5%)

57,4%42,6%

CUMULATIVE TOTAL


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The total area of the special economic zone «Togliatti» is 660 ha.

Its development is carried out in three stages simultaneously with the construction of residents’ production areas, which allows the terms of territory development to be shortened. Development of the first stage, which is 181 ha, started in 2012.

In 2014 a step-by-step connection to the objects of infrastructure on a constant basis was launched. About 9 km of roads and pavement inside the site, 8 km of gas lines, a network of drinking- and industrial water supply of a total length of over 16 km, a power supply network, a cabling overpass and a range of other objects were built.

2.2 CONSTRUCTION OF INFRASTRUCTURE

1ST STAGE 181 HA 245,6 HA233 HA 2ST STAGE3ST STAGE

2016-2017 2015-2016 COMPLETED

20112010 2012 2013 2014


ELECTRICAL SUPPLY GAS SUPPLY

TECHNICAL CHARACTERISTICSOF INFRASTRUCTURE OBJECTS OF THE 1ST STAGE

WATER SUPPLY AND WATER DISPOSAL

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LENGTH OF CABLE BRIDGES (FIRST STAGE)

8 200 m

* on condition that the residents have: - agreed technical conditions - finished construction of networks - concluded agreements for energy supply

** when starting production

POWER (THE 1ST STAGE)

20,3 mWUsage** – 100%

CONNECTION ON A CONSTANT BASIS

IV quarter 2014*

SUPPLIER

Supplier - CJSC «Energetika i SvyazStroitelstva»

PIPE LINE LENGTH

8 122 m

CAPACITY

15 000 m³/hourUsage** – 53.5%

CONNECTION ON A CONSTANT BASIS

IV quarter 2014*

SUPPLIER

LLC «Gazprom gazoraspredeleniyeSamara»

SUPPLIER

LLC «AVTOGRAD-VODOKANAL»

DRINKING WATER PIPE LINE (V1)

Pipe line length 8 400 mCapacity 2 920 m3/dayConnection III quarter 2014* Usage** – 36%

TECHNICAL WATER SUPPLY (V2)


SEWAGE SYSTEM (K1)


STORM WATER DRAINAGE (K2)

Pipe line length 9 140 mCapacity 2 052,4 m3/dayConnection III quarter 2014* Usage** – 96%


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SEZ «TOGLIATTI»TODAY

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ANNUAL REPORT 2014 SEZ «TOGLIATTI» TODAY SEZ «TOGLIATTI» TODAY ANNUAL REPORT 2014

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SEPTEMBER 2013 OCTOBER 2014

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3.1. LOCATION OF SEZ RESIDENTS

DESIGN WORKSCONSTRUCTIONPRODUCTION

Total area of SEZ «Togliatti»

660 ha

Connection of SEZ residents to the infrastructure has been started

2014

Declared residents’ investments

18 899,52 bln. Rub.

Workplaces to be created

4 525 units

LLC «ZHELEZNYI POTOK»LLC «HI-LEX RUS»

LLC «TPV РUS»

LLC «GKN DRIVELINE TOGLIATTI»

LLC «ATSUMITEC TOYOTA TSUSHO RUS»

LLC «MUBEASUSPENSION COMPONENTSRUSSIA»

LLC «NOBELAUTOMOTIVERUSYA»

LLC «TOGLIATTI PAPER MILL»

LLC «JV SYSTEMS»

LLC «AZ POWERTRAIN»

LLC «SANOH VOLGA»

LLC «MANN+HUMMEL TOGLIATTI»

LLC «EDSCHA TOGLIATTI»

LLC «CIEAUTOMOTIVE RUS»

LLC «OZON PHARM»

LLC «PRAXAIR SAMARA»

LLC «SOLOFILMS»


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3.2. RESIDENTS OF SEZ

Project: Development and production of body assembly for CJSC «GM – AVTOVAZ». Occupied area: 20,9 haStart of construction: 2013Start of production: 2016Project status: Construction

LLC «JV SYSTEMS», USA - RUSSIA

Project: Construction of a modern hi-tech plant for the production of auto components (hinges, bonnet hinges, trunk hinges, door stops, hand brake levers)Occupied area:2,5 hаStart of construction:2013 Start of production:2015 Project status:Construction

LLC «EDSCHA TOGLIATTI», GERMANY

Project: Development of diversified production of a wide range of products: fuel lines, windshield washers, flexible cables seat frames, and springs for engine mounts.Occupied area:3,25 haStart of construction:2013 Start of production:August 2014Project status:Production

LLC «NOBEL AUTOMOTIVE RUSYA», TURKEY

Project: Building a plant specializing in the manufacture of pre-selectors for manual and automatic transmissions for the automotive industry.Occupied area:5 hаStart of construction:2014Start of production:2015Project status:Construction

LLC «ATSUMITEC TOYOTA TSUSHO RUS», JAPAN


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Project: Development and production of control and window cables for the automotive industryOccupied area:4 hаStart of construction:2014 Start of production:2015 Project status:Construction

LLC «HI-LEX RUS», JAPAN

Project: Development and production of suspension springs for automobile productionOccupied area:5,69 hаStart of construction:2014 Start of production:2016 Project status:Construction

LLC «MUBEA SUSPENSION COMPONENTSRUSSIA», GERMANY

Project: Development and production of hi-tech cast aluminium parts for automobile enginesOccupied area:3 hаStart of construction:2014 Start of production:2015 Project status:Construction

LLC «CIE AUTOMOTIVE RUS», SPAIN

Project: Construction of a modern hi-tech factory for the refueling of tanks with industrial and special gasesOccupied area:2,4 hаStart of construction:2014Start of production:2015 Project status:Construction

LLC «PRAXAIR SAMARA», USA


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Project: Development and production of auto components «MANN+HUMMEL» on the territory of SEZ «Togliatti»Occupied area:1,65 hаStart of construction:2014Start of production:2015Project status:Construction

LLC «MANN+HUMMEL TOGLIATTI», GERMANY

Project: Development and production of corrugated paper from waste-paper to make hard and corrugated cardboard and corrugated packaging Occupied area:2 hаStart of construction:2014Start of production:2015Project status:Construction

LLC «TOGLIATTI PAPER MILL», RUSSIA

Project: Development and production of constant velocity joints for automobile productionOccupied area:10,5 hаStart of construction:2015Start of production:2016Project status:Design works

LLC «GKN DRIVELINE TOGLIATTI», UK

Project: Development and production of auto components for car fuel and brake systems according to innovative technologies.Occupied area:2,9 hаStart of construction:2015Start of production:2016Project status:Design works

LLC «SANOH VOLGA», JAPAN


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Project: Development of production of replaceable polyhedral inserts and other hard-alloy productsOccupied area:1 haStart of construction:2014Start of production:2015Project status:Design works

Project: Development and production of three-layerpolyethylene filmsOccupied area:2 hаStart of construction:2015Start of production:2016Project status:Design works

LLC «SOLOFILMS», RUSSIA

LLC «ZHELEZNYI POTOK», RUSSIA

Project: Development of modern production of automobile seatsOccupied area:5,4 haStart of construction:2012Start of production:2015Project status:Design works

LLC «TPV РUS», SLOVENIA

Project: Development and production of medical productsOccupied area:3 hаStart of construction:2014Start of production:2015Project status:Design works

LLC «OZON PHARM», RUSSIA

Project: Development and production of engines for vehiclesOccupied area:2,9 hаStart of construction:2014Start of production:2015Project status:Design works

LLC «AZ POWERTRAIN», INDIA - RUSSIA


SEZ RESIDENTSABOUT THE PROJECT

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ANNUAL REPORT 2014 SEZ RESIDENTS ABOUT THE PROJECT SEZ RESIDENTS ABOUT THE PROJECT ANNUAL REPORT 2014

Which factors were the essential ones when choosing the SEZ «Togliatti» as the site for allocation of your production?

The Special Economic Zone «Togliatti» provides «GM-AVTOVAZ» with an opportunity to combine many of its operations in one location at the same time that we are expanding our overall business the overall business to serve Russian and export markets with a new, more competitive generation of Chevrolet NIVA. The proximity to our current operations in Togliatti was certainly one factor – this allows us to maintain tight control over one portion of our logistics costs – but more important were two other factors: a.] the «one-stop-shopping» that the SEZ provided in terms of permitting, contracting, utilities, etc., and b.] the SEZ’s

General director of SJSC «GM-AVTOVAZ»

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РЗИДЕНТЫ ОЭЗ О ПРОЕКТЕ

JEFFREY GLOVER: «THE SEZ IS HELPINGDISPROVE THE PERCEPTION THAT RUSSIAIS AN IMPOSSIBLE PLACE TO DOBUSINESS IN».

extremely attractive incentive package. Together, these helped to create a favorable business environment for the Samara region as a whole and, in turn, a solid economic foundation for the further development of our JV.

Describe the progress rate for your project in SEZ «Togliatti». What results did you manage to achieve during 2014?

Construction of production facilities for our subsidiary («JV Systems» LLC) began on June 14th, 2013. Progress is visible every day, and it is exciting to see our future take shape. Would I like construction to be faster? Most certainly yes! But, as with every project, we have had to make small adjustments due to design issues, supplier timing and equipment availability, and this has impacted overall construction timing. Nevertheless, we can resolve these issues and – most importantly – «GM-AVTOVAZ» will launch the new vehicle into the market in 2016 as planned. Stamp-ing equipment for our new Press Shop is on-site currently, with installation set to commence over the holidays, and our new weld-ing line is in transit from Korea and due to arrive in December, enabling a Q1 installation.

Disclose your plans for 2015?

We will wrap-up delivery of the rest of the Press and Body Shop equipment early in the year, as well as installation, commissioning and testing of the new lines. At the same time, we will begin hiring production staff for our new operations – we need to on-board new employees early enough to allow sufficient training so that quality is top-notch at vehicle launch. During the second half of the year, we will complete construction of the new Aftersales warehouse and begin operations there. With that, construction of all facilities will be completed in 2015. .

How do you evaluate the support of your project from the side of the managing company of SEZ «Togliatti»?

The SEZ-team has been extremely easy to work with from the very start. The process of residency should have taken up to four months, but with the local team’s support we managed everything – from concept to approvals by the Governor of Samara and the Ministry of Economic Development – in about one month! That is incredibly quick considering all the steps that were required. Most recently, Alexey Pakhomenko and Alena Mezina provided vital support in terms of getting the customs zone within «JV-Sys-tems» territory established and operational. This is the very first customs-free zone in the SEZ and, of course, both the SEZ and we


can benefit from it. We now need their support to clear up some issues with utilities – electricity, gas, water and waste water – in particular getting infrastructure developed in adjacent territories to our operations.

From your standpoint, what are the advantages of running a business in Russia and in Togliatti particularly?

The cost base is extremely competitive in Togliatti versus other locations, which makes running business here more effective. Additionally, the regional workforce is extremely talented, is well educated and we find that everybody we hire is hungry to develop themselves personally and professionally. That creates an excit-ing environment in our Company, and that energy translates into a terrific performance culture!

Do you plan to cooperate with other residents of SEZ «Togliat-ti»? If yes, in which directions?

Yes, in two ways. First, some of our suppliers are residents or will become residents of the SEZ. Having them next door is terrific in that we can avoid logistics expenses and, if problems arise – as they do in any business – the lines of communication are short so that solutions can be developed quickly together. Second, togeth-er with other residents of the SEZ we are discussing some of the shared challenges we have with regards to utilities infrastructure.

What advice could you give to companies which are planning to become residents of the SEZ «Togliatti»?

Let’s not make this too complicated. The SEZ «Togliatti» provides significant benefits for its residents. For the «bean-counters» out there, that means financially – the package of incentives are very attractive. But more importantly, the SEZ – with its «one-stop-shopping» approach – is helping disprove the percep-tion that Russia is an impossible place to do business in. It is not! Yes, investors must do their homework ahead of time, but with the right partners, it is actually quite easy and the investment climate very supportive.

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We were attracted by the tax privileges and possibilities of cost reduction in customs operations. Our main customer is the AVTOVAZ – RENAULT – NISSAN Alliance, which is in close proximi-ty. Besides, it is convenient to ensure deliveries to other regions owing to a well-developed transport system.

Describe the progress rate for your project in SEZ «Togliatti». What results did you manage to achieve during 2014?

The main achievement of this year is that we have started up the production in test mode and have produced the first products - fuel lines, seat frames and flexible cables. We have also shipped a portion of our goods to export.Despite the fact that the construc-tion process depends on different unexpected factors, we are moving according to the schedule which can be considered a good result.


We plan to start production at full capacity, hire employees, set up a stable production process.


JSC «SEZ «Togliatti» supports us significantly in different issues, starting from construction to cooperation with state authorities. It is important for us that the company’s administration is ready to compromise and to search for different solutions to problems.


There are possibilities for development of companies in the Russian automotive industry as the market here is not yet saturat-ed. As for Togliatti, there are conditions suitable for production localization - proximity to the AVTOVAZ – RENAULT – NISSAN Alliance, the possibility of product sales to the neighboring regions, and availability of suppliers.

Do you plan to cooperate with other residents of the SEZ «Togli-atti»? If yes, in which directions?

Yes, we are planning to work with LLC «Togliatti paper mill» which is going to produce cardboard and corrugated package. We do not exclude cooperation with other companies if their products are in demand at our production.


The SEZ provides great possibilities for business development - we have received evidence hereof from our own experience. The majority of investment sites do not offer such a wide package of privileges and options as special economic zones do. For the automobile industry SEZ «Togliatti» is one of the most advanta-geous sites for production localization.

DUSAN DUDA GENERAL DIRECTOR OF LLC «NOBEL AUTOMOTIVE RUSYA»

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We have chosen the Samara region and SEZ «Togliatti», guided by several factors: firstly, by the big economic potential of the region, a favorable investment environment, and the availability of quali-fied specialists. The Special Economic Zone «Togliatti» offers significant customs and tax privileges, and has a developed infra-structure provided to residents free of charge, besides it has a favorable location relative to our main customer Alliance «AVTOVAZ – RENAULT - NISSAN».

ALEXANDR PEREVOSCIKOV GENERAL DIRECTOR OF LLC «EDSCHA TOGLIATTI»

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Describe the progress rate for your project in the SEZ «Togliat-ti»? What results did you manage to achieve during 2014?

We have completely finalized the construction of the 1st stage of the industrial complex and the administration building. Currently the works on the starting-up and adjustment of engineering networks and heating systems are going on. All communications inside the plant are ready; the capacities for heating, electricity and water are allocated. The building is ready for commissioning as soon as SEZ provides energy resources. The search for suppli-ers from among Russian companies is very active now. 45 compa-nies–suppliers have passed through the audit procedure. We are also studying the offers of cooperation from two new potential customers.


We will have a very active and productive year. First of all, we will carry out the acceptance procedure of the industrial and office buildings of our enterprise on the territory of SEZ «Togliatti». Right after this we will transfer equipment from the Czech Republic, and begin its assembly and set-up. We plan to finalize the preparation for the start of production at the beginning of the year and to open the enterprise officially in June 2015.


We have constructive relations with the SEZ. The regional adminis-tration and the administration of the SEZ are interested in the development of regional activity of Edscha and support us signifi-cantly, we have received evidence hereof from our own experience at every stage of investment project realization, including choosing a site and infrastructure development. This was the most impor-tant support and we appreciate the efforts of the local administra-tion. We can also mention a friendly relation to residents, and prompt help in issues which had arisen. All our wishes and remarks are taken into consideration. We would like to express a special gratitude to the General Director of the OJSC «SEZ «Togli-atti» Alexey Pakhomenko for continuous support. We hope to continue our productive cooperation in the future.


In Europe the automobile industry has already reached its peak and the market is oversaturated; in Russia the automobile indus-try has not yet reached its culmination and the market is open for


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I would advise a company willing to become a resident of SEZ «Togliatti» to keep in touch with investors who have already become residents, especially with those who have achieved results and can share their real experience and knowledge.

new suppliers and manufacturers. The staff potential and the abun-dance of qualified workers in the field of automobile industry are an indisputable advantage of Togliatti. I should mention the fact that Togliatti has occupied the 6th place in the list of «30 best cities for business - 2013», made up by «Forbes», which confirms the prospects of the city for business development.

Do you plan to cooperate with other residents of the SEZ «Togliatti»? If yes, in which directions?

We are interested in cooperation with the other residents of SEZ. «Edscha Togliatti» is ready to supply products for them and to consider them as suppliers.

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WHY DID COMPANIES DECIDETO BE LOCATED IN THE SEZ «TOGLIATTI»?

LLC «CIE AUTOMOTIVE RUS»

The current macroeconomic situation differs much from the one in 2013, when we made the decision of realizing this project, but this did not hinder us from starting construction this year, next year we are planning to start production. The main factor for opening the plant «CIE AUTOMOTIVE» was the plan of the Alliance AVTOVAZ – RENAULT – NISSAN to organize production of engines, which we are planning to deliver parts for.

LLC «HI–LEX RUS»

We have taken the decision to localize production in Russia and in the SEZ «Togliatti» due to different reasons, among them is logistics optimization. Currently we are examining the possibility of expand-ing business to Central Asia.

LLC «SANOH VOLGA»

One of the advantages of running a business in Russia, in our opinion, is the possibility to be the first ones to take the niche at the market and to claim priority over other companies. Besides, this country has a great staff potential in the field of engineering, and there are a lot of young specialists.

The advantages of Togliatti are the reasonable cost of staff and young managers with high potential, as well as lower than average prices in comparison to big cities such as Moscow and Saint-Peters-burg, and a safe environment. We have chosen SEZ «Togliatti» because of its close location to the city and in essence to AVTOVAZ which had recommended this site. Besides, we were attracted by the low cost of land and a simple procedure of its lease and purchase.

LLC «OZON PHARM»

Our company is Russian and almost everybody speaks Russian there. It is easier to launch a business in home country, because we understand how the principles of market functioning and state structures work. And in Togliatti we expect less tension with engineering-technical staff.

LLC «MUBEA SUSPENSION COMPONENTS RUSSIA»

The main factors surrounding the choice of the SEZ «Togliatti» as a site for our production allocation are: availability of a parcel of land, a plan of realization of infrastructure construction and connection to communications, status of the SEZ as a project supported by the government, declared customs privileges, and location in the region of a big automobile cluster.

LLC «TOGLIATTI PAPER MILL»

The main advantages of running a business in Togliatti are: rich productive infrastructure and a good staff reserve. For us cooperation with other residents of SEZ is one of the most important directions of the business plan. We reckon that every resident becomes a consumer of our product (package) and raw material resource (waste paper).

We will search for mechanisms of intensive cooperation. As for relations with JSC «SEZ «Togliatti», it completely corresponds with our expectations and has been positively estimated. We hope that in the future the companies’ work will not give rise to complaints.


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PROJECT TEAM

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ANNUAL REPORT 2014 PROJECT TEAM PROJECT TEAM ANNUAL REPORT 2014

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THE ANNUAL INCREASEIN THE NUMBER OF PEOPLE IN THE TEAM

On April 29, 2014 the open joint-stock company «Special economic zone of industrial-production type «Togliatti» (OJSC «SEZ «Togliatti») was registered. The Samara region has become the first region where the management of the special economic zone is taken from the affiliate OJSC «SEZ» and given to the newly established joint-stock company.

On December 23, 2010 an order establishing the affiliate OJSC «Special Economic Zones» in Samara region was signed, and the project team started to be formed, its main set target was to manage the special economic zone «Togliatti».

THE FOUNDERS OF THE JSC «SEZ «TOGLIATTI»: OJSC «SEZ» AND THE GOVERNMENT OF THE SAMARA REGION

2011 – 15 people

2012 – 30 people

2013 – 50 people

2014 – 77 people

August 12, 20144 years after the project SEZ «Togliatti» was startedTest launch of production LLC «Nobel Automotive Rusya»

ANNUAL REPORT 2014 PROJECT TEAM PROJECT TEAM ANNUAL REPORT 2014

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2014 IN PHOTOS

1ST QUARTER2014

LLC «Edscha Togliatti» LLC «JV Systems»

LLC «Nobel Automotive Rusya»Cable racks

Stormwater treatment facilities

Communal area. Administration building

Communal area. Warehouse, garage

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2ND QUARTER2014

Road construction LLC «JV Systems»

Administrative building LLC «Edscha Togliatti»

Electrical substation «Technopark»

LLC «Nobel Automotive Rusya»

Stormwater treatment facilities


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3RD QUARTER2014

LLC «Nobel Automotive Rusya» LLC «CIE Automitive Rus»

LLC «JV Systems» LLC «HI-LEX RUS»

Communal area. Garage

LLC «MANN+HUMMEL Togliatti»

LLC «Togliatti paper mill»

LLC «Atsumitec Toyota Tsusho Rus»


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4TH QUARTER2014

LLC «HI-LEX RUS»

LLC «CIE Automitive Rus»

LLC «Praxair Samara»

LLC «Nobel Automotive Rusya»

LLC «Atsumitec Toyota Tsusho Rus»

LLC «CIE Automotive Rus»

Communal area


LLC «Togliatti paper mill» LLC «Edscha Togliatti»

LLC «JV Systems» LLC «MANN+HUMMEL Togliatti»

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Communal area. Stormwater treatment facilities

LLC «Togliatti paper mill»


YEAR IN REVIEW, DEVELOPMENT PROSPECTS.

INTERVIEW WITH ALEXEY PAKHOMENKO

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In what way is 2014 notable for SEZ «Togliatti»?

This year has become a key one for our project development. The first production on the territory of SEZ «Togliatti» was started up. The company manufacturing automobile parts LLC «Nobel Automotive Rusya» started the deliveries to the customer. The construction of the factory LLC «Edscha Togliatti» was finalized, eight companies have their productions in the process of active construction.

For the first time, the volume of non-budget investments into the project has exceeded the state ones. Out of 6,8 bln Rub., 3,9 bln are private ones. Let me remind you that in 2013 the residents have invested over 350 mln Rub.

The main construction phases of infrastructure (1st stage) were finalized. To imagine the scale I can provide some figures – 16 km of water lines, 8 km of gas supply lines and internal energy supply nets of about 40 km. The total area of the first stage is 181 ha.

It is notable that in 2014 the managing company of the Special Economic Zone «Togliatti» has also gone through significant changes. The Samara region has become one of the few regions where the management of SEZ had been taken from the affiliate OJSC «SEZ» and given to the newly established OJSC «SEZ «Togli-atti», which means a high level of confidence to our project.

How do you estimate the rate of development of SEZ «Togliat-ti»?

The project SEZ «Togliatti» has celebrated its 4-year anniversary. This time can be divided into two periods: preparation, which had taken two years and was focused on project documentation development and approval procedures, and construction. In order to reduce the terms and increase the effectiveness of state invest-ments we are building the infrastructure of SEZ at the same time as constructions of the residents’ factories take place. Such approach is not often used for the development of investment sites and only personal experience is to be relied on. But this allowed the economic effectiveness of the project to increase at the early stage of its realization. The result will be achieved subject to full trust and agreement of all participants in the process.

We are thankful to the residents of the SEZ for confidence and trust in our project. Active support from the side of the Ministry of Economic Development of the Russian Federation, OJSC «SEZ», and the Government of the Samara region and Nikolay Ivanovich Merkushkin has personally helped to achieve the necessary result. The fact that two years after the construction had started, the

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volume of private investments into the project exceeded the state ones, speaks for itself.

How can you estimate the position of your project in comparison to other SEZs in Russia?

We became noticeable among the Russian SEZs. The main thing for us now is not to slow down. In our work we are guided by the experience of «pioneers» who have achieved good results, these are SEZ «Alabuga» and SEZ «Lipetsk». The launch of the first production and its successful work will become a significant factor for other investors, and this means we have a good chance to increase the rate of development and to take leading positions.

What problems did you face? How did it influence the realization of the SEZ project?

Definitely, some problems come up; no big construction does without problems. We manage to cope successfully with the major-ity of them owing to accumulated experience and with support of federal and regional authorities and colleagues from OJSC «SEZ». Unfortunately, life is variable. In 2014 the example of this was a complicated political situation which has influenced the attraction of foreign investors. But despite of it, foreign companies previously accepted into the project, did not give up on their plans and proceeded to the construction of production areas. At the same time, there is a good tendency – Russian investors were especially active, owing to which two more companies from the branches, new to us, joined the residents - LLC «Ozon Pharm» and LLC «SoloFilms».

Unfortunately, two Russian companies LLC «Avtoelektronika» and LLC «Steering Systems Plus» have left the project which was caused by objective reasons – the investors did not manage to fulfill the undertaken obligations. We should clearly understand that this is a natural process, which happens in all SEZs. Neverthe-less, we have managed to compensate for the leaving companies on account of new investors which have been attracted. Now the number of residents of SEZ «Togliatti» remains 17 with the total sum of declared investments of about 19 bln Rub.

Tell about new projects?

It is noteworthy that both projects are realized by local investors. LLC «Ozon Pharm» plans to manufacture medical products. The founder of the company is LLC «OZON» which already has operat-ing production in Zhigulevsk and is in the top-30 of the biggest companies in the pharmaceutical industry (according to the rating of Remedium magazine, December 2013).

ANNUAL REPORT 2014 YEAR IN REVIEW, DEVELOPMENT PROSPECTS. INTERVIEW WITH ALEXEY PAKHOMENKO YEAR IN REVIEW, DEVELOPMENT PROSPECTS. INTERVIEW WITH ALEXEY PAKHOMENKO ANNUAL REPORT 2014

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The project is estimated to be 500 mln Rub and will ensure creation of 200 new work places.

Another new resident LLC «SoloFilms» plans to launch the produc-tion of three-layer polyethylene films for packaging of edible and inedible goods. The founder is LLC «SuperPrint», which has been functioning successfully since 1995 and has leading positions in the market of printing services of the Samara region. The planned investments into the project are 300 mln Rub.

What are your plans for 2015?

The coming year will be more active than the previous one. We are planning to start the construction of the second stage of SEZ «Togliatti» on the territory of 245,6 ha, this is half as much as the area of the first stage. A very important target for us will be construction of customs infrastructure which will allow the residents to use Free Customs Zone in full. As of now the companies use the temporary scheme.

Together with the construction process the residents will continue to work on their sites. Eight companies are expected to start their productions; the rest will start with construction on the site.We also expect the foreign investors to be more active next year, and the appearance of new residents in SEZ «Togliatti». As before, the main target for us will be attracting companies with high potential which can fulfill the undertaken obligations.

We are confident in the future and have no doubt that next year we will achieve success in close cooperation with each other.

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ИТОГИ ГОДА, ПЕРСПЕКТИВЫ РАЗВИТИЯ. ИНТЕРВЬЮ АЛЕКСЕЯ ПАХОМЕНКО ГОДОВОЙ ОТЧЕТ ОЭЗ «ТОЛЬЯТТИ» 2014

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WE ARE CONFIDENT IN THE FUTURE AND HAVE NO DOUBT THAT NEXT YEAR WE WILL ACHIEVE SUCCESS IN CLOSE COOPERATION WITH EACH OTHER

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ANNUAL REPORT 2014 YEAR IN REVIEW, DEVELOPMENT PROSPECTS. INTERVIEW WITH ALEXEY PAKHOMENKO

Documents

ГО 2014 для web3 engoeztlt.ru/uploads/files/GO-2014-dlya-web3_eng.pdfBUILDING THE FUTURE ANNUAL REPORT 2014 JSC «SEZ «TOGLIATTI» RUSSIAN FEDERATION 445051 TOGLIATTI, FRUNZE