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RUSSIA INDIA REPORT
03
www.russiaprofile.org Unwrapping the mystery inside the enigma
http://eng.autoinvest-russia.ru AUTOINVEST website
IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA
http://en.rian.ru/business RIA Novosti business news THE ECONOMIC TIMES WEDNESDAY_MARCH 18_2009 Business
The car market is
Russia & India News:
still alive and will
A new shipping route to link the
Russian Far East and India
The Nakhodka commercial seaport in the Rus-
soon grow again
sian Far East opened a new Nakhodka-Mumbai
shipping route. Sea Swift, the first vessel to sail
the route, was laden with 25,000 tonnes of hot-
and cold-rolled steel coils and batches, a transit
At the end of February 2009, project development. cargo from Kazakhstan. As the cold-rolled steel
St Petersburg hosted The car component manu- cargo has to meet specific storage and handling
Autoinvest, an annual facturers, following their requirements, the seaport has been equipped
international conference OEM partners, need a well- with special hangar warehouses preventing the
aimed at attracting developed infrastructure and cargo’s direct exposure to sunlight and moisture.
investment to the Russian car state support to build busi- The Nakhodka seaport has long enjoyed good
component market. Ivan ness. Car clusters serve to fa- commercial and partnership relations with key
Bonchev, Head of the cilitate their entry in the new seaports in South-East Asia and the USA.
Automotive Segment at market. This long-term proc- www.ncsp.ru
Ernst&Young, believes that, ess requires not only a more
despite the crisis, Russia is business-friendly environ-
one of the least saturated car
Russia’s Tvel signs $700 mn
ment, but also technological
markets in the world. As only development of the market.
nuclear fuel contracts with India
20 pc of Russians own a car, Tvel, a subsidiary of the state corporation
the market is bound to resume What sales volume do the car- Atomenergoprom, has signed long-term con-
growth in the next 2-3 years. makers expect in Russia for tracts with India's Department of Atomic Energy
2009-2010? for the delivery of fuel pellets to India's nuclear
ALEX KNELZ
This year will see the deepest power plants. The total value of the contracts
RIR dip in sales and new car reg- exceeds $700 mn.
istration. We expect the mar- Experts predict a surge in competition on the
To what extent will the finan- ket to shrink by 30 pc, down Indian market.
cial crisis affect the foreign car- to less than two million cars "The Russian company was the first to sign a
makers operating in the Russian per year. Yet the best-case nuclear deal with India since the Nuclear Sup-
market? scenario for 2010 suggests pliers Group (NSG) lifted restrictions on the sup-
Virtually all will see sales go even a slight economic recov- ply of uranium, reactors, and nuclear technolo-
down. This year the car mar- ery will boost demand and gies to India on September 6, 2008," Tvel press
ket will shrink and its seg- increase market growth rate office said.
mentation will change dra- by 10 pc against 2009. Before selecting Russian fuel suppliers, India
matically. The hardest hit will had conducted low-enriched uranium supply
be medium- and upper-me- When will the Russian car mar- talks with companies in Canada, Kazakhstan
dium-sized brands, especial- ket emerge from the crisis? and Africa. However, the market saw no real
ly SUVs, whose sales were The Russian car market de- scramble for the lucrative contracts.
growing steadily. Budget cars pends on the general eco- "India has had a real and effective nuclear
will retain popularity even nomic situation, primarily on power generation partnership with only one
RIA-NOVOSTI
through the economic down- energy prices before curren- partner, Russia," said Ivan Andriyevsky, a man-
turn, which is good news for cy rates or other macroeco- aging partner at the 2K Audit Business Consult-
Oil The Indian state-owned Oil and Natural Gas Corporation
companies who might gain a nomic fundamentals. Opti- ing. In particular, Russia is currently participat-
competitive edge by offering mists say the market will re- ing in the construction of India's Kudankulam
(ONGC) has completed its protracted takeover of Imperial Energy
lower prices. cover its growth rate by mid- nuclear power plant and plans to build power
2009, whereas pessimists do stations in other parts of the country.
What are the prospects for the not expect any revival until On the one hand, a $700 mn contract is a great
ONGC’s first
foreign original equipment man- 2010.
-
success in the competition for the Indian mar-
ufacturers (OEMS) in Russia? ket. India, which suffers from a huge energy
I do not think their strategies deficit, plans to build 28 reactors with a total
have undergone any radical capacity of 40 GW until 2020, which is certainly
changes. True, some compa- RIR Dossier the good part of the story. The bad part is that,
nies have put expansion with the NSG embargo lifted, Russia will have
plans into cold storage for According to the European quite a few rivals who also wish to develop and
steps in Russia
several months or even a year, Business Association, 2.08 strengthen their nuclear cooperation with India.
but most OEMs are moving mn foreign cars were sold in Vedomosti
forward at a steady pace. The Russia in 2008, with a mar-
Russian market is far from ket growth rate of 26 pc. The
Indian cosmonauts in Russian
being glutted and has enor- quality of Russian car compo-
mous growth potential. If the nents has been inferior to
spaceships
crisis is over within two years, foreign counterparts. Shigeru Russia and India are expected to collaborate on
the OEMs might reach target Shoji, Director General of Su- launch vehicles for future manned space mis-
production capacities and zuki Auto Mfg Rus, says “Rus- sions.
After several futile attempts to Imperial Energy will be 2008. After Gazprombank’s potential investors. While substantially increase their sian manufacturers still strug- India plans to use Russian experience and
broaden its presence in ONGC’s first independent failed attempt to purchase a the Tomsk government did market share in Russia. gle to compete with global equipment in its space programme to send a
Russia, the Indian state- project in Russia and, appar- 25 pc stake, the company not grant a single subsurface market players.” Yet they have man into orbit, informed Madhavan Nair, the
owned company ONGC (Oil ently, this experience comes drew the attention of other licence in 2008, there are as How can Russian auto clusters their strengths too: “OEM Chairman of Indian Space Research Organiza-
and Natural Gas Corporation, at a price. strategic investors and was many as 22 auctions sched- help foreign suppliers tap into companies operate global- tion (ISRO).
Ltd.) has at last succeeded in ONGC drew public atten- approached by Sinopec uled for 2009. Curiously, this the Russian market? ly and cannot deal with small Russia and India share a Memorandum of
adding a new Russian asset to tion to its Imperial Energy (China Petroleum & Chemi- is the year when oil produc- Cluster development is one of businesses. That's why in Rus- Understanding on Joint Activities in the Field of
its portfolio. acquisition by paying $2.1 cal Corporation), Rosneft tion in Tomsk is expected to the top priorities for all the sia we bring them,” says Bur- Human Spaceflight Programme, which was
bn, twice Imperial Energy’s and Sibir Energy (a Russian decline. stakeholders involved, nota- khard Schallock, from the signed during the visit of Russian President
DMITRY IVANOV
then-current market price, oil company). ONGC might be interested bly the government, carmak- Fraunhofer Institute for Pro- Dmitry Medvedev to India in 2008.
MOSCOW in the midst of the ongoing After the asset evaluation, in purchasing soon-for-sale ers and car component man- duction Systems and Design “We are considering a manned space flight
financial crisis. In fact, however, Rosneft chose to areas on the right bank of ufacturers. They must join Technology (Germany). of our own. Russia has vast experience in
On 9 March, ONGC won its ONGC had approached Im- drop its takeover plans, as the the Ob River. According to forces to step up cluster man-controlled spaceflight which we hope
takeover battle with Impe- perial Energy in August recoverable amounts of hy- forecasts, though, their re- it will share with us to help the Indian space
rial Energy, a relatively small 2008, before the global drocarbons were too modest source potential might prove programme. We plan to perform the first Indian
company based in the Tomsk (15 mn barrels of C1 + C2 oil rather low. space flight on a Russian space vessel,” said
Region, with the acquisition equivalent under the Russian Many market players think
Subsidies for car buyers
Madhavan Nair to the press-service of Russian
of the company’s controlling ONGC hopes to reserves classification) and ONGC might opt for buying space corporation Roskosmos, summing up the
stake. Imperial Energy was
meet its country’s
too scattered throughout the stakes in some other small results of his visit to Russia. Russia Today TV
subsequently delisted from
growing energy de-
company’s acreage to be Russian oil companies, like The Russian government has approved a list of Russian-made Channel
the London Stock Exchange.
mands by ramping
commercially viable. ZAO Dulisma (the Irkutsk cars whose buyers will be eligible for refund of car-loan interest
With this move, ONGC hopes A manager from another oil Region) or Taas Yuryakh rates out of a 2 billion-ruble special budget allocation.
to meet its country’s growing up oil production company, which also consid- Neftegazdobycha (Yakutia), India starts licensed production of
energy demands by ramping
in Russia, where it
ered Imperial Energy for ac- both recently handed over to
Smerch rocket systems
up oil production in Russia.
appears undaunted
quisition, said his company Sberbank by Urals Energy
Now, ONGC plans to grow
by many challenges
decided against the bid due for debt cancellation. The Nikolai Makarovets, general director and chief
its hydrocarbon reserves in to operational challenges. problem is that their licence designer of the Federal State Unitary Enterprise
Russia through licence auc- facing the nation “Imperial’s fields are far blocks are listed as Russia’s ‘Splav’ acknowledged that after Russia fully dis-
tions. As a foreign investor, from each other, and many strategic resources, and charged its obligations under the MLRS procure-
the company stands little cannot be produced without ONGC will need approval of ment contract with Delhi, it may agree to launch
chance of winning anything downturn, but had not hydraulic fracturing,” he a government commission to licensed production of its MLRS weapons in
really important, but this ac- launched the official takeo- stated in an interview with access them. India. “Our Indian colleagues are now bringing
tivity will allow ONGC to ver bid until December 2008, the Petroleum Information Still, the Indian operator ap- up the issue of Russian MLRS licensed produc-
learn the ropes of the Rus- when NYSE oil stocks were Agency. pears undaunted by the
SOURCE: "ITOGI" MAGAZINE
tion, and they have a good reason for it. Just
sian energy market. already down by 55 pc . Even He added that Imperial En- many challenges faced in
List of Russian-made cars
see the results of our tank and aircraft licensed
though the market expected ergy failed to meet its 2008 Russia. During its January manufacture experience. Both Rosoboronexport
Worthwhile experience ONGC to fi nally give up the production target of 25 thou- visit to the Tomsk region, the and ‘Splav’ understand it and are ready to come
Prior to the Imperial Energy deal or offer a lower price, it sand barrels per day. At the ONGC delegation endured
Car model Russian manufacturer
Minimum
to the negotiating table whenever necessary,”
deal, ONGC held only a 20 pc had to stick to its initial com- time of the takeover, the temperatures as low as -38C
price
said Mr Makarovets at IDEX 2009, an interna-
VAZ-2105 Avtovaz JSC $4,600
interest in the Sakhalin-1 mitment, being bound by the company produced only 6 without complaint, and con- tional arms fair held in the United Arab Emirates.
project (Exxon Neftegas), approval of a UK regulator. thousand barrels per day. fi rmed its plans to increase
Lada Samara Avtovaz JSC $6,600
As for the procurement contract, it is being im-
and had long strived to beef oil production and build its
Lada Kalina Avtovaz JSC $7,400
plemented in full, according to Mr Makarovets.
up its Russian energy port- The company’s value The company’s outlook reserve base in the region. It
Renault Logan Avtoframos JSC $8,500
“We have not had any conflicts over deadlines.
folio. The company was ru- Over four years of operation ONGC needs to step up its remains to be seen if ONGC’s
Lada Priora Avtovaz JSC $8,000
Our experts closely monitor the work process
moured to be planning a bid in the Tomsk Region, Impe- international oil production efforts will eventually win
Fiat Albea Sollers Naberezhniye Chelny JSC $9,700
and, what is more important, comply with all their
for a stake in the Sakhalin-3 rial Energy has become an to meet India’s growing en- the trust of its Russian part-
Kia Spectra IzhAvto JSC $10,000
contract obligations. We have many years of co-
project, and had already ex- attractive takeover candi- ergy demands and make up ners and a share in bigger
Scoda Fabia Volkswagen Group RUS Ltd $10,200
operation with India ahead of us,” said the agen-
amined various possibilities, date, with quite a few dis- for falling output. Russian projects.
-
Chevrolet Niva GM- Avtovaz $11,100
cy representative. According to Mr Makarovets,
in co-operation with Ros- coveries on its exploration However, the Tomsk Region
Ford Focus Ford Motor Company (Vsevolozhsk) $11,400
all work under the current contract is to be com-
neft, of developing Russia’s record and the necessary in- has no new oil-rich areas Source: IFX.RU
Wolkswagen Jetta Volkswagen Group RUS Ltd $18,500
pleted before the end of the year. “We still have
energy deposits. frastructure completed in that could justify the risks of Interfax News Agency time,” he says. Interfax-AVN
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