- Avionics systems and complexes;
- Systems, complexes and devices for electronic warfare (EW) and intelligence;
- Identification friend or foe (IFF) systems and devices;
- Measuring instruments (MI)
Concern Radio-Electronic Technologies JSC is part of Rostec State Corporation (hereinafter “the Corporation”) and includes a total of around 80 companies developing and manufacturing electronic products intended for military and civil applications. The Concern has a total of over 50,000 employees and supplies its products to more than 20 countries across the world.
Streamlining the structure of the holding company
Concern Radio-Electronic Technologies JSC was established in 2009 by decision of Rostec State Corporation.
Initially, the Concern included scientific and production centers specializing in the development and manufacturing of EW and IFF systems, and a number of companies developing and manufacturing electric connectors and special-purpose cable assemblies.
In 2011 a number of companies manufacturing measuring instruments for different uses were included in the Concern. Late in 2012 several companies developing and manufacturing avionics and electronic equipment systems for military and commercial aviation that were formerly part of Aircraft Engineering Concern OJSC (Concern Aviapriborostroenie OJSC) were transferred under the management of the Concern.
To create a unified vertically integrated holding company, the first step was to arrange for a comprehensive audit in all of its companies. An integrated centralized company management model was implemented, and cooperation ties were established.
In 2009–2015 all the federal state unitary enterprises within the Concern were reincorporated as joint-stock companies; all the required licenses for the development, manufacturing and repair of weapons and military equipment were duly obtained. KRET JSC became a single center for the execution of contracts under the state defense order which resulted in an increased workload for the Concern’s companies.
In 2013–2015 Rostec State Corporation transferred 55 blocks of shares worth a total of over RUB 50 million to the Concern’s charter share capital
In 2010–2015 efforts were taken to ensure representation of the Parent Company in the Boards of Directors of its companies.
The measures aimed at forming the holding company made it possible to streamline the management structure (See Concern’s Divisions).
In 2015 the Concern was included in the aircraft cluster of Rostec State Corporation.
Consolidation of assets
In 2012-2015 the Concern purchased blocks of shares of 6 companies, which enabled it to fill in the gaps in its competencies in avionics, EW and IFF (see Table 1) and resolve the issues related to the lack of production capacities required to fulfil the state defense order. By now, the cost of these assets has grown by more than 40% as compared to the purchase cost.
Non-core asset management
As part of the formation of the holding company, the Concern acquired a number of companies that had been mainly established in the middle of the previous century. These companies were characterized by surplus property portfolio; they were heavily burdened with a large number of social and infrastructure facilities and unutilized land plots. Some of the companies were on the brink of bankruptcy.
Optimizing the property portfolio is one of the Concern’s main objectives in terms of increasing the operational efficiency of its companies and attracting additional funding sources for its key investment projects.
Since 2012 the Concern has routinely identified and sold non-core assets, restructured and optimized the production capacities and fixed assets.
The list of non-core assets for disposal and the Concern’s assets that need to be restructured includes such assets as:
- are not intended for use for the Concern’s core activities,
- are not used for the implementation of the production programs.
The sale of such assets will have no economic implications in terms of executing state programs.
Т1. Companies purchased by the Concern to fill in the gaps in its competencies
|Stavropol Radioplant Signal PJSC||EW|
|Radiopribor JSC||EW + IFF|
|Ulyanovsk Instrument Manufacturing Design Bureau JSC (UKBP JSC)||Avionics|
|Phazotron Research Institute of Radio Engineering JSC (Phazotron-NIIR Corporation JSC)||Avionics|
|Ural Instrument Engineering Plant JSC (UIEP JSC)||Avionics|
- Elektroagregat Research Institute OJSC,
- Tomsk Research and Production Association Kontur OJSC (TPO KONTUR),
- Penza Production Association EVT OJSC (PPO EVT),
- Tomsk Measuring Apparatus Factory OJSC (TZIA),
- Planeta Scientific Research and Experimental Design Company OJSC (NIOKP Planeta)
- Design Bureau for Automatic Systems OJSC (KBAS)
- A.I. Glukharev Engels Design Bureau “Signal” OJSC (EOKB Signal),
- Moscow Temp Radio Plant JSC (MRZ Temp)
- Phazotron-Novator CJSC,
- Rostov Plant of Timing Mechanisms OJSC (Rostovsky Chasovoy Zavod),
- Aviation Technologies CJSC (Aviatsionnye tehnologii),
- Phazotron-Krasnoye Znamya CJSC,
- Aviapribor-Servis CJSC.
P1. Proceeds from sales of non-core assets, billion RUB
In 2012-2015 the proceeds from sales of noncore assets totaled RUB 10 billion, with another RUB 10 billion expected in 2016 (see Fig. 1). The obtained funds, with the agreement of the Corporation, are used by the Concern for financial recovery of key troubled companies that possess competencies that are unique and crucial for the industry, as well as to implement large-scale projects.
At the moment, the Concern is a leader among other companies of the holding company (integrated system) in terms of selling non-core assets of Rostec State Corporation.
In 2015 owing to the intensified effort on selling non-core assets, the Corporation’s revenue increased to RUB 5.8 billion, which is twice the amount of 2014. It stands to mention that these figures are the result of the Concern’s vigorous activities. The Concern’s share in the total proceeds from the sale of the Corporation’s non-core assets in 2015 amounted to 93% (RUB 5.4 billion).
- Special Design Bureau of the Cable Industry JSC (OKB KP JSC) (75%-1 share),
- TECHNO OJSC (49%),
- Almaz-Phazotron Scientific and Production Center JSC (100%),
- Tarasov Aviaavtomatika JSC (75%-1 share).
Improving the organizational structure
Alongside with streamlining its property complex, the Concern has improved its asset management system to meet the following objectives:
- reduce the costs,
- increase efficiency,
- reduce the lead time
- introduce high-technology products in the production process
In this area, the pilot project was merging Utyos OJSC to the Ulyanovsk Instrument Manufacturing Design Bureau JSC (UKBP JSC). Full information on the reorganization projects is provided in Table 2.
Т2. Measures to improve organization in 2016
|Measures||Current status||Completion date|
|Merging Utyos OJSC into Ulyanovsk Instrument Manufacturing Design Bureau JSC (UKBP JSC)||Completed||01 March 2016|
|Merge Kaluga Plant for Radio-Engineering Equipment JSC (KZRTA JSC) into Kaluga Research Radio Engineering Institute JSC (KNIRTI JSC)||Project approved by the Board||October 2016|
||Cost-effectiveness analysis of the projects. Development of detailed project implementation plans||December 2016|
|Dissolve Aviapribor-Holding JSC and Avionica Concern JSC||Project preparation||December 2016|
Avionics: airborne electronic systems and complexes
Avionics is a whole spectrum of electronic systems performing a variety of tasks in aviation. Avionics includes communications systems, as well as systems for displaying and controlling different regimes and devices. Avionics stands for aviation electronics.
Navigation and communications systems
Ensure en-route safety. Include inertial, hyperbolic, radio and satellite navigation equipment, as well as equipment for navigation by the Earth’s magnetic and gravitational fields. Include radio and satellite communications equipment.
Glass cockpit flight instrument displays
The pilots’ instrument displays of modern commercial aircraft use the glass cockpit, a technology that has also gained popularity in general aviation. Multi-purpose display systems reflect the current flight information, instrument data and information arrays. Include windshield- or helmetmounted displays.
Aircraft health monitoring and diagnostic systems
Include diagnostic sensors, devices for treatment and health prediction for aircraft instruments and systems. Increase repair efficiency, reduce unscheduled repairs; Increase flight safety.
Computer systems of aerial vehicles
A system for the processing and representation of navigation and flight information used for control, navigation and weapon delivery. Includes airborne sensors, transducers, switchboards, processors and information bases.
Avionics: general employee information
|Number of employees, persons||35,343||35,244||31,756||30,648|
|Labor productivity, thousand RUB||1,646||1,901||2,214||2,481|
|Average monthly salary, thousand RUB||30.4||33.7||38.2||41.7|
- 1. RSIE JSC
- 2. UKBP JSC
- 3. RPKB JSC
- 4. NIIAO JSC
- 5. OKB Elektroavtomatika JSC)
- 6. MIEA JSC)
- 7. KBPA OJSC)
- 8. NIIP imeni Tikhomirova JSC)
- 9. Phazotron-NIIR Corporation JSC
- 10. AVIONICA MRPC JSC)
- 11. Aeropribor-Voskhod OJSC
- 12. UPPO JSC
- 13. RPKB JSC
- 14. Tekhpribor PJSC
- 15. ZhRZ JSC
- 16. NPP Izmeritel JSC
- 17. UIEP JSC
- 18. Utyos OJSC
- 19. VMZ JSC
- 20. NPP ElTom JSC
- 21. ELARA OJSC
- 22. Phazotron-VMZ JSC
- 23. U-UPPO OJS
- 24. Almetyevsk Radiopribor Plant JSC
- 25. Aviapribor JSC
- 26. Eletkropribor PJSC
- 27. SEZ imeni Ordzhonikidze JSC
- 28. ANPP Temp-Avia PJSC
 The Avionics sales proceeds amounted to RUB 70.3 billion which is 6.4% above the target for 2014.
 At the end of 2015 Avionics net profit amounted to RUB 7.068 billion, which exceeds the target by 6.2%, and is 35% up compared to the previous year’s figure. The considerable growth of net profit is the result of increased efficiency of the Division’s companies at large, additional incomes due to tangible fluctuations of the exchange rate of the domestic currency, and sales of non-core blocks of shares.
 The military products revenues have a significant share (85%) in the Avionics revenue structure. The products supplied under the state defense order account for 56% of military products revenues, and the products supplied as part of military technical cooperation with foreign contracting agencies account for the remaining 44%.