Knowledge
gives the power

Power
keeps the world safe

About the Company

Airborne AESA radar station

The station can not only pursue dozens of targets, but also effectively provides dejamming, confuses opposing radars and even maps the surface making high-resolution maps

Down

Knowledge
gives the power

Power
keeps the world safe

About the Company

Airborne AESA radar station

The station can not only pursue dozens of targets, but also effectively provides dejamming, confuses opposing radars and even maps the surface making high-resolution maps

1
About the Company
Key lines of business of the Concern:
  1. Avionics systems and complexes;
  2. Systems, complexes and devices for electronic warfare (EW) and intelligence;
  3. Identification friend or foe (IFF) systems and devices;
  4. 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.

1.1
Concern’s structure

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.

The Concern is number:
45/50
place among the world’s 50 largest defense companies, according to the Stockholm International Peace Research Institute (SIPRI)

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.

93/500
place among Russia’s 500 largest companies, as rated by the “RBC 500: All Business in Russia”

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:

  1. are not intended for use for the Concern’s core activities,
  2. 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
Tekhpribor PJSC Avionics
Phazotron Research Institute of Radio Engineering JSC (Phazotron-NIIR Corporation JSC) Avionics
Ural Instrument Engineering Plant JSC (UIEP JSC) Avionics
Non-core assets of the Concern as of 31 December 2015:
  1. Elektroagregat Research Institute OJSC,
  2. Tomsk Research and Production Association Kontur OJSC (TPO KONTUR),
  3. Penza Production Association EVT OJSC (PPO EVT),
  4. Tomsk Measuring Apparatus Factory OJSC (TZIA),
  5. Planeta Scientific Research and Experimental Design Company OJSC (NIOKP Planeta)
  6. Design Bureau for Automatic Systems OJSC (KBAS)
  7. A.I. Glukharev Engels Design Bureau “Signal” OJSC (EOKB Signal),
  8. Moscow Temp Radio Plant JSC (MRZ Temp)
  9. Phazotron-Novator CJSC,
  10. Rostov Plant of Timing Mechanisms OJSC (Rostovsky Chasovoy Zavod),
  11. Aviation Technologies CJSC (Aviatsionnye tehnologii),
  12. Phazotron-Krasnoye Znamya CJSC,
  13. Aviapribor-Servis CJSC.

P1. Proceeds from sales of non-core assets, billion RUB

Property item Blocks of company shares 2012 2013 2014 2015 2016 target 12 6 0 0.5 1.2 0.1 1.1 1.7 0.1 5.0 0.4 4.4 6.0

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).

The following blocks of shares owned by KRET JSC were sold in 2015, in line with the decision of Rostec State Corporation:
  1. Special Design Bureau of the Cable Industry JSC (OKB KP JSC) (75%-1 share),
  2. TECHNO OJSC (49%),
  3. Almaz-Phazotron Scientific and Production Center JSC (100%),
  4. 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:

  1. reduce the costs,
  2. increase efficiency,
  3. reduce the lead time
  4. 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
Merger projects:
  1. Merge Taganrog Research Institute of Communications JSC (TNIIS JSC), and Research Institute of Special Information and Measuring Systems JSC (NII SIIS JSC) into Rostov Plant Pribor JSC (RZ Pribor JSC);
  2. Merge Control System, Navigation and Communication Radio Monitoring Design Bureau JSC (KB SVIAZ JSC) into Gradient All-Russian Research Institute JSC (GRADIENT VNII JSC);
  3. Merge Bryansk Special Design Bureau PJSC (BSKB PJSC) into Bryansk Electromechanical Plant JSC (BEMZ JSC);
  4. Merge Sadko Television Plant JSC (TZ Sadko JSC) into Research and Production Association KVANT JSC (NPO KVANT JSC).
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

Item 2013 2014 2015 2016 (target)
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
Integrated solution providers
  • 1. RSIE JSC
  • 2. UKBP JSC
  • 3. RPKB JSC
Research institutes and design bureaus
  • 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
Production facilities
  • 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

[1] The Avionics sales proceeds amounted to RUB 70.3 billion which is 6.4% above the target for 2014.

[1] 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.

[1] 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%.

Revenue, million RUB [1]

2013 2014 2015 2016 target 80,000 70,000 60,000 40,000 58,163 66,999 70,315 76,048

Net profit, million RUB [2]

2013 2014 2015 2016 target 10,000 8,000 6,000 4,000 5,221 5,234 7,068 8,862

Revenue structure in 2015, million RUB [3]

59,951 9,592 772 Military products Non-military products Other revenues

Revenue structure for military products in 2015, million RUB

EW: Electronic warfare and intelligence systems

Electronic warfare (EW) is a whole range of coordinated measures and efforts aimed at electronic destruction of the enemy’s electronic assets, electronic protection of one’s own electronic assets, as well as electronic and information support.

Electronic warfare Electronic protection Protection against means of electronic destruction Protection against unintended interference (ensuring electromagnetic compatibility) Protection of troops and facilities against adversary intelligence technologies Electronic and information support Collection, analysis and integration of information on the electronic environment Technical reconnaissanceof the enemy’s electronic assets Comprehensive technical control of status and robustness of friendly assets and facilities against enemy technical equipment Electronic attack Functional destruction Electronic jamming Destruction with weaponsguided by emissions

Key indicators related to EW employees

Item 2013 2014 2015 2016 (target)
Number of employees, persons 9,563 9,787 10,017 10,294
Labor productivity, thousand RUB 1,597 1,480 1,848 2,056
Average monthly salary, thousand RUB 27.9 32.5 36.2 40.8
Integrated solution providers:
  • 1. NPO KVANT JSC
  • 2. BEMZ JSC
  • 3. GRADIENT VNII JSC
Research institutes and design bureaus:
  • 4. KNIRTI JSC
  • 5. NII Ekran JSC
  • 6. KB SVIAZ JSC
  • 7. NII SIIS JSC
  • 8. BSKB PJSC
Production facilities:
  • 9. Signal PJSC
  • 10. RZ Pribor JSC
  • 11. KZRTA JSC
  • 12. TNIIS JSC
  • 13. TZ Sadko JSC
  • 14. Mikrotekhnika JSC
Карта #2

Data as of 31 December 2015

[1] At the end of 2015, the EW revenues amounted to RUB 18.5 billion which is 2.9% above the target and exceeds the 2014 figure by 27.8%. A considerable growth of revenue is mainly explained by the fact that products that have longer manufacturing cycles were successfully delivered as part of the RUB 2.4 billion state defense order of Research and Production Association KVANT JSC (NPO KVANT JSC), and that Signal PJSC executed the state contract for supplying products required by the Ministry of Defense (worth RUB 1.5 billion).

[2] The EW net income at the end of 2015 amounted to RUB 271 million which is RUB 444 million less than in 2014. The deviation is mainly the result of significant operational loss of NPO KVANT JSC due to the necessity to adjust and retrofit the products supplied to the Ministry of Defense. The relevant measures will be taken in 2016 to offset the losses of NPO KVANT JSC.

[3] Due to the specific character of its business, the sale of military products accounts for more than 97% of the Division’s revenue.

Revenue, million RUB [1]

2013 2014 2015 2016 target 25,000 20,000 15,000 10,000 5,000 15,273 14,484 18,513 21,161

Net income, million RUB [2]

2013 2014 2015 2016 target 2,000 1,500 1,000 500 0 709 715 271 1,863

Revenue structure in 2015, million RUB [3]

17,987 461 65 Military products Non-military products Other revenues

Revenue structure for military products in 2015, million RUB

7,103 9,932 781 67 104 Domestic market(direct state defense order) Domestic market(cooperation, state defense order) Domestic market(military technical cooperation (MTC) Exports (direct MTC) Exports (indirect MTC)
27.4%
ahead of IFF sales targets

Identification friend or foe (IFF) systems

Identification friend or foe is obtaining positive information on the nationality of a target on the basis of the friend or foe principle in the course of detection, tracking and weapon delivery. The Unified Radar-Based IFF System is a comprehensive set of organizational measures and equipment that make it possible for weapons and military equipment to perform IFF-related tasks.

[1] At the end of 2015, the IFF revenues amounted to around RUB 12 billion which is 27.4% above the target and exceeds the 2014 figure by 3.4%.

[2] Due to the sale and transfer of blocks of shares of a number of companies, the IFF net income for 2015 was RUB 1.063 billion which is RUB 256 million less than the 2014 figure.

[3] The revenues from military products sold to public contracting authorities accounts for the major portion of the IFF revenues (83%). The contracts executed as part of the state defense order generate 84% of the revenues from military products.

In 2014–2015 there were cases when either companies of the IFF Division were sold (Karachev Plant Elektrodetal PJSC, Atlant Plant PJSC, Snezhet Plant JSC), or blocks of certain companies of the IFF Division were transferred under management (Kazan Research Institute of Computer Science and Technology JSC (KNITI VT JSC), Special Design Bureau of Timing Mechanisms OJSC (SKB ChM OJSC), which affected the Division’s key financial and economic performance indicators.

Revenue, million RUB. [1]

2013 2014 2015 2016 target 13,000 11,000 9,000 7,000 5,000 8,992 11,594 11,990 8,309

Net income, million RUB2 [2]

2013 2014 2015 2016 target 1,500 1,000 500 0 867 1,319 1,063 538

Revenue structure in 2015, million RUB [3]

9,800 2,090 100 Military products Non-military products Other revenues

Revenue structure for military products in 2015, million RUB

1,580 6,647 1,573 Domestic market(direct state defense order) Domestic market(cooperation, state defense order) Domestic market(military technical cooperation (MTC)
Integrated solution providers:
  • 1. АV.I. Shimko Radioelectronics Scientific and Production Association JSC
Research institutes and design bureaus:
  • 2. KPKB JSC
  • 3. SPC SAPSAN JSC
  • 4. NIIRS & ISE JCS
  • 5. NTTs SSGO OJSC
Production facilities:
  • 6. Radiopribor JSC
  • 7. Zavod Elekon OJSC
Карта #3

Data as of 31 December 2015

+9
Concern’s support business units:
  1. AO VZLET Engineering Support to Testing JSC (EST VZLET JSC)
  2. Rekonstruktsiya OJSC
  3. Radiopriborsnab JSC
  4. Avionica Concern JSC,
  5. Avtomatika OJSC,
  6. Richag JSC,
  7. Aerospace Equipment Corporation JSC,
  8. Aviapribor-Holding OJSC,
  9. Aircraft Engineering Concern OJSC (Concern Aviapriborostroenie OJSC).

MI: Measuring Instruments

Measuring instruments are used to obtain physical quantities of an object in the specified range. For example, MI include oscillographs, power meters, spectral analyzers, signal generators, frequency references and other devices.

Key indicators related to MI employees

Number of employees,persons 4,000 1,000 2013 2014 2015 2016 target 3,499 3,041 2,657 2,603
1,400 300 Labor productivity,thousand RUB 885 873 1,005 1,173
35 10 Average monthly salary,thousand RUB 22.5 23.8 26.4 30.1

Revenue, million RUB [1]

2013 2014 2015 2016 target 3,500 3,000 2,500 2,000 1,000 3,096 2,653 2,670 3,053

Net income, million RUB [2]

2013 2014 2015 2016 target 300 200 100 0 2 8 143.5 273

Revenue structure in 2015, million RUB [3]

1,222 1,332 116 Military products Non-military products Other revenues

Revenue structure for military products in 2015, million RUB

395 827 Domestic market(direct state defense order) Domestic market(cooperation, state defense order)
Integrated solution providers:
  • 1. NNPO imeni Frunze JSC
Research institutes and design bureaus:
  • 2. KVARZ IEM JSC
  • 3. SDB RMD JSC
  • 4. KB Zavoda Rossiya JSC
  • 5. NPK RITM JSC
  • 6. Avangard OJSC
Production facilities:
  • 7. UCM JSC
  • 8. Radiy JSC
  • 9. Kursk Plant Mayak JSC
Карта #4
1

Givi Dzhandzhgava

Deputy General Director for airborne equipment R&D, KRET JSC

Born: 10 August 1940, Tbilisi.

Education: Graduated from the Moscow Power Engineering Institute with a degree in Automation Engineering and Telecommunications (1964).

Positions: Deputy General Director for R&D of airborne equipment and General Designer at KRET JSC; Member of the Engineering Academy (Russian Academy of Technological Sciences), the International Informatization Academy (Russia) and the Academy of Aviation and Aeronautics Sciences (Russia); Chairman of the Academic Board at the Ramenskoye Instrument Engineering Design Bureau JSC (RPKB JSC) and Chairman of KRET JSC Chief Designer Council; academician and Chairman of the State Examination Committee at the Moscow Aviation Institute.

Membership in organizations: Bureau of the League of Assistance for Defense Enterprises of Russia, Bureau of the Central Council of the Engineering Union, Expert Council of the Russian State Duma Industry Committee, Scientific and Technical Council of the Russian Military-Industrial Commission and the Public Council under the Russian Ministry for Industry and Trade, Supervisory Board of the Russian Association of Russian Automakers.

Honors, awards and other achievements: Honored Scientist of the Russian Federation (1998), D. Sc. in engineering; over 450 scholarly works and over 300 invention patents. Laureate of the USSR State Prize (1983), of Russian State Prizes (1996), Russian Government Prizes (1997, 1999 and 2009) and of Government Prizes in Science and Technology (2008), Prizes of the Russian Academy of Sciences.

Role in the industry: Givi Dzhandzhgava has led and directly participated in a number of research, experimental and development projects, aimed at advancing new branches of science and technology. The avionics systems and complexes that are used to perform a wide range of tasks have been installed on Su, Tu and MiG aircraft, and on Ka and Mi helicopetrs.

2

Yuri Maevsk

General Designer for EW

Born: 2 April 1956, Pinsk.

Education: Popov Higher Naval School of Radioelectronics (graduated in 1978).

Positions: General Designer for EW, Deputy General Director of KRET JSC.

Membership in organizations: member of the Russian Academy of Engineering.

Honors, awards and other achievements:

D. Sc. in engineering, member of the Russian Academy of Engineering and the Scientific and Technical Council of the Military-Industrial Commission of the Russian Federation. Author of over 300 scholarly works, including 12 inventions. Awarded with the Order “For Military Merit”, received more than 20 department medals and badges, including the Honorable Radio Operator badge, and entitled Honored Engineer of the Russian Federation (2006). Appointed General Designer for EW by decision of the Military-Industrial Commission of the Russian Federation in 2015.

Role in the industry: Since April 2012 Yuri Maevsky has been General Designer for EW; he has headed the Chief Designer Council which unites over 50 representatives from almost 40 organizations. He leads the project on the development of new (advanced) highly technical (resource intensive) systems (complexes) of weapons, military and special equipment that are strategically important for ensuring the country’s defense and security.

Sergey Chulyuk

General Designer of the Unified Radar-Based IFF System

Born: 9 April 1963, Krivoi Rog.

Education: Kiev Higher Military Aviation Engineering Academy (1985), Zhukovsky Air Force Engineering Academy (1994).

Positions: Deputy General Director, General Designer of the Unified Radar-Based IFF System at V.I. Shimko Radioelectronics Scientific and Production Association JSC.

Honors, awards and other Achievements: General Designer of the umbrella organization for the industry, Head of Chief Designer Council for the Unified Radar-Based IFF System. Sergey Chulyuk has extensive experience; he is renowned and reputable across the industry, among the military authorities and in related branches.

Role in the industry: General Designer of the umbrella organization for the industry, Head of Chief Designer Council for the Unified Radar-Based IFF System. Sergey Chulyuk has extensive experience; he is renowned and reputable across the industry, among the military authorities and in related branches.