Kalashnikov Concern

Concern Kalashnikov is the largest Russian developer and manufacturer of combat automatic and sniper weapons, guided artillery shells, a wide range of civilian products: hunting rifles, sports rifles, machine tools and tools. The segment of the company's civilian products includes hunting rifles, sports rifles, machine tools and tools. 51 percent of the shares of the concern belong to the state corporation Rostec, 49 percent were bought out by private investors. Kalashnikov products are supplied to more than 27 countries.

The company was created on the basis of the Izhmash Scientific and Production Association, the date of its foundation is 1807. The renaming was carried out on August 12, 2013.

Performance indicators

2020: Decrease in revenue by 6 billion rubles, to 30 billion rubles

In 2020, the Kalashnikov concern raised 30 billion rubles, which is almost 6 billion rubles less than a year ago, equal to 35.98 billion rubles.

The group's general director Dmitry Tarasov, citing the reasons for the financial downturn, noted that about a quarter of the contracts planned for 2020 were postponed until 2021. Delays in shipments occurred due to various circumstances provoked by the COVID-19 coronavirus pandemic, he said.

According to Tarasov, the company's profit before interest on loans, income tax and depreciation on main intangible assets (EBITDA) at the end of 2020 amounted to 3 billion rubles, down from 5.5 billion rubles in 2019.

It follows from the reporting of the concern that the decrease in revenue in the first half of 2020 is seasonal in nature and is due to the fact that most of the shipments of finished products occur in the fourth quarter. At the same time, commercial, administrative and interest expenses are recognized as expenses of the period and actually form a loss of the reporting half-year.

By the end of December 2020, the Kalashnikov group remains the largest manufacturer of combat automatic and sniper weapons, guided artillery shells and precision weapons in Russia, according to the group's website. According to the concern's own data, the concern's share in the Russian small arms production market is about 95%.

The main composition of the shareholders is as follows: the blocking package in the amount of 25% plus one share of the concern belongs to Rostec, 75% minus one share is owned through TKH-Invest by the former Deputy Minister of Transport, and now the lead singer of the rock band Crlband Alan Lushnikov.^[1]

History

2023: Creation of a unit for the production of kamikaze drones

At the end of May 2023, the Kalashnikov concern announced the launch of a unit for the production of complexes with controlled barraging ammunition. Drones are designed for high-precision destruction of remote single and group ground objects of the enemy.

The division of special vehicles, created in the Kalashnikov structure, in addition to UAVs, will produce ground-based launch equipment, test vehicles, mobile control points from complexes for adjusting high-precision ammunition firing, and special-purpose equipment maintenance equipment. Also, the division will carry out research and development work in various areas.

After the technical re-equipment scheduled for this year, next 2024 we will be able to multiply the number of UAVs produced in our traditional niche - barraging ammunition, reconnaissance drones, - says Kalashnikov President Alan Lushnikov, whose words are quoted by the concern's press service. - We cannot announce the exact number and volumes, but the increase in production of all special equipment will be multiple.

In February 2023, it became known about the increase in the production of kamikaze drones Kub and Lancet, which were developed by ZALA Aero (part of the Kalashnikov group of companies). Drones carry warheads weighing three kilograms. The Cube and Lancet can spend up to 30 minutes in flight, and their maximum speed is 130 kilometers per hour.

We are fully fulfilling our obligations under the state defense order, deliveries in a number of areas have grown many times over. At the same time, we continue to improve our technologies and developments, - noted in Rostec (this state corporation includes the Kalashnikov concern) in February 2023.[2]

2022: Kamikaze Drone Development

In August 2022, the Kalashnikov concern announced the creation of kamikaze drones amid radical changes in the tactics of armed conflicts at the global level.

The future of hostilities is likely to be about the confrontation between systems that use physical, digital and electronic warfare. In this regard, we, in turn, believe that we must develop a niche that has already been occupied in the tactical link: barraging ammunition, reconnaissance drones, "Kalashnikov President Alan Lushnikov told Kommersant.

According to him, the Vortex guided missiles have "colossal prospects." He did not disclose the plans, but noted that the concern "is engaged in this tightly and seriously." Lushnikov noted that "good reserves in technology and competencies" help to create such weapons. The rocket is already being tested and "working in confidential mode with the customer to implement."

The president of Kalashnikov said that the concern has no plans to create large strike drones:

Airfield-based drones are not our segment, colleagues from UZGA [Ural Civil Aviation Plant - approx. TAdviser], Kronstadt are successfully engaged in it, a huge amount of efforts have been invested there from the customer and from the industry, and we do not plan to go there yet, get up fifth in line. We want to be number one in our niche.

Alan Lushnikov also commented on the high interest in the Bayraktar combat drones. He called them "a really good engineering system."

This is not even a question of management: it is the connection of all participants in the process with everyone, a huge number of consumers of information and the ability to transfer intelligence not just from one point to another point, but to anyone - on request. Target designation - to any user, - explained the president of Kalashnikov[3]

2021

Vladimir Lepin - the new general director of the concern

On August 10, 2021, the Kalashnikov concern announced the appointment of Vladimir Lepin as the new general director. He replaced Dmitry Tarasov, who led the enterprise since 2019. Read more here.

Rostec handed over to Kalashnikov the management of TsNIITOCHMASH

At the end of April 2021, it became known about the transfer to the trust of the Central Research Institute of Precision Engineering (TsNIITOCHMASH, is the head enterprise of the Sotnik project - equipment for the "soldier of the future") to the Kalashnikov concern. This step was made by Rostec and explained by the fact that it would allow combining the competencies of two companies specializing in the development and production of small arms and equipment. Read more here.

Receiving a grant in the amount of 91.96 million rubles from RFRIT

Russian Information Technology Development Fund (RFRIT) On January 12, 2021, he announced TAdviser the results of two competitive selection for grants: support for projects for the implementation of domestic IT solutions (PP RF No. 550) and support for development projects (domestic software PP RUSSIAN FEDERATION No. 1185).

Kalashnikov received 91.96 million rubles (91,969,000,00) for the implementation of the project "Introduction of an operational production planning system with operational accounting and a dispatching system based on" end-to-end "digital technologies." Read more here.

2020: Alexey Mitenkov - the new deputy head for IT and cybersecurity

On November 2, 2020, Alexey Mitenkov began working in the Kalashnikov group of companies as Deputy General Director for IT and Cybersecurity. Mitenkov announced this to TAdviser on November 3, 2020. Read more here.

2017

Kalashnikov will deal with drones

The Kalashnikov concern, which is part of the Rostec structure, will create a company that will provide unmanned aircraft services, TASS reported in November 2017. As noted in the press release of the weapon giant, the company will be able to solve the problems of aerial photography, cartography, telecommunications, forest protection and private facilities thanks to its own unmanned aerial vehicles (UAVs).

Both light and heavy drones are being tested. The difference between the latter is that they can fly without additional recharging for several days and transport several tons of cargo. Already in the summer of 2018, mass production of such UAVs will be launched.

FRP loan for diversification

The Expert Council of the Industrial Development Fund approved in October 2017 a loan to the Kalashnikov Concern for the implementation of a project to develop new types of civil small arms (GSO). This is the first project approved by the FRP, which is aimed at diversifying the enterprises of the military-industrial complex (OPK).

The project cost is 678.7 million rubles, of which 67.7 million rubles. can be provided to the FRP in the form of a preferential loan.

"Defense

industry enterprises have huge technical and production potential, but investment funds are often not enough to translate it into new civil production. FRP programs offering "long and cheap money" can become drivers for the transition of dozens of defense enterprises to "civilian rails." For example, Concern Kalashnikov faced a high level of equipment wear and lack of capacity to expand the production of civilian small arms, "said Roman Petrutsa, director of the FRP

.

With the help of a loan from the FRP, the concern intends to create a pilot section for the mechanical processing of parts, where, in particular, rifles will be produced for our biathlete athletes.

"This is the first such project for the concern. It was important for us to understand how the FRP works and in what time frame it makes a decision. After this positive experience, we are considering the possibility of applying for more capital-intensive projects aimed at producing civilian products under the Conversion program, "added Alexey Krivoruchko, General Director of Concern Kalashnikov.

The concern plans to export part of its products to the CIS, the Middle East, Africa and Asia.

With the involvement of a loan from the FRP, the company will produce three types of civilian weapons.

• The Saiga MK-107 is the world's first self-loading hunting carbine with balanced automation, which significantly increases the stability of weapons when firing from unstable positions.
• The Tiger is the only hunting weapon created on the basis of the Dragunov sniper rifle.
• "Biathlon" - sports rifles for biathlon, which are used by athletes in holding competitions, including the Olympic Games.

Update Vendor System

Starting from the end of 2017, Kalashnikov, part of the state corporation Rostec, intends to adhere to the changed philosophy of interaction with suppliers within the framework of a comprehensive supply network, the concern said on October 5, 2017. According to the concern, the updated system will allow, first of all, to neutralize the long-overdue problem associated with the current cost method of pricing the cost-plus BARS, which stimulates production in vertically integrated structures and does not allow the development of external suppliers.

At the same time, the Kalashnikov concern is moving towards solving a number of other problems inherent in the industry:

• Attracting investment capital: a relatively small domestic market and low demand does not ensure the payback of projects, and thus repels investment capital.
• Development of suppliers "competencies: Russian suppliers do not have sufficient competencies in supply chain management, marketing, quality management, costs, etc.

According to the general director of the concern, Alexei Krivoruchko, the company faces an important task of switching to a transparent and effective model of cooperation within the framework of the production of the final product in general and the management of supply networks in particular. The Kalashnikov concern intends to introduce the functionality of the "supplier's personal account" within the framework of the enterprise's ERP system in order to ensure uninterrupted teamwork, optimize costs and accelerate the launch of developments on the market.

Kalashnikov Concern has already developed and implemented a comprehensive methodology for assessing suppliers according to the main criteria: quality, logistics and price. If necessary, employees of the concern will conduct audits at partner enterprises in order to create a development program and reduce costs. Information on the results of the assessment is used in the formation of an audit schedule for problem suppliers. The best suppliers will be involved in the development of the concern as partners.

In general, it is expected that the joint efforts of the concern and suppliers will reduce the cost of products, reduce the cycle from order to delivery, and increase the level of quality and technical equipment of military and civilian products.

Digital Transition in Manufacturing

On September 22, 2017, the head of Rostec, Sergei Chemezov, launched a "production line of the future" at the Kalashnikov concern, involving the introduction of technologies and business processes of the so-called Industry 4.0 in this area.

The project allows you to "digitize" production, starting from the design stage and ending with an automated transport system that eliminates manual labor, and automatic ordering of the necessary parts in the right time. In addition, the equipment on the line can be configured remotely, and the designers, technologies and production itself will be in a single digital environment.

One of the monitoring and control tools was virtual reality technologies, which combined data from various systems into one virtual cabinet.

Also in production, it is planned to introduce additional technologies using artificial intelligence, which will allow not only to fight already emerging freelance situations, but also to predict their occurrence.

In particular, we are talking about a marriage tracking system that is able to recognize marriage and record such trends towards it as overheating of equipment, change in sound, vibration, etc.

Today we saw a pilot project on the way to implementation of Industry 4.0 at our enterprises. And they began this path here in Izhevsk. I am sure that this experience will be successful, and in the future we will be able to apply it to other large industries, "Chemezov said.

According to the general director of the Kalashnikov concern Alexei Krivoruchko, this project is "the production of zero losses."

We took all service secondary processes out of the brackets in order to achieve maximum efficiency. About a hundred production innovations have been introduced here, and if in the next three years we can scale at least 80% of them to all the concern's sites, this will be a real breakthrough, he said.

2014

Revenue growth of 28%

The revenue of the Kalashnikov concern in 2014 increased by 28 percent and amounted to about three billion rubles, 700 million rubles more than in 2013. Earlier it was reported that the projected revenue of the Kalashnikov Concern in 2014 will amount to more than 9 billion rubles.

"Despite the sanctions at the end of 2014, Kalashnikov went to net profit for the first time in the last seven years and almost doubled the production of small arms to 120 thousand products," said Aleksey Krivoruchko, general director of the Kalashnikov concern. According to him, the concern managed to achieve an increase in production volumes due to civilian products. "In 2015, we will continue to increase production volumes and plan an increase of 20-25 percent," Krivoruchko said.

Market development in Asia-Pacific and Africa

In 2014, Kalashnikov began to develop new sales markets, primarily in the Asia-Pacific region and Africa. At the same time, Kalashnikov sees the main priority for itself in maintaining the position of a key arms supplier for the Ministry of Defense and other power structures of the Russian Federation. The expected total investment will be about 5 billion rubles.

Concern "Kalashnikov" presented a development strategy and the concept of modernization

The implementation of the modernization project will make it possible to qualitatively change production technologies, while reducing current costs and energy costs. In addition, the measures taken will have a favorable effect on labor conditions and productivity. In general, it is planned to allocate more than 4 billion rubles for the program on technical re-equipment, overhaul and new construction in 2014-2017.

Kalashnikov began to implement a modernization program, in the first year the management of the Concern invested more than 1 billion rubles in updating the current fleet of machine tools.

- Thanks to the chosen strategy of Kalashnikov concern development and attraction of private investments already today we observe a serious increase in the concern activity efficiency, - noted [[Sergey Chemezov|Sergey Chemezov]. - According to the results of the first half of the year, the production of small arms has more than doubled, global modernization of production is taking place, new technologies are being introduced, and the competitiveness of manufactured products is growing. According to our estimates, in the near future these changes will reduce the labor intensity of production by 30%. All this allows us to say with confidence that the experience of private-public partnership is successful, and within the framework of Rostec's development strategy it can be extended to other enterprises

.

One of the key areas of work to optimize production is the introduction of MIM technologies - a new method for the manufacture of high-precision parts by pressing plastic masses. This will make it possible to produce parts of complex shape with almost no subsequent processing. As a result, the labor intensity of production in a number of areas will decrease by 90%, 140 pieces of equipment will be released, and 1200 square meters. m of production space. In 2014-2015, it is planned to introduce more than 40 new parts produced using MIM technology, of which 15 have already been tested.

"One

of our strategic goals is to increase the competitiveness of our products in the global market through systematic and consistent work aimed at increasing labor productivity and production efficiency," explained Alexey Krivoruchko, General Director of the Kalashnikov Concern. - The production modernization program will more than halve the number of necessary equipment. Production space will be reduced by more than 40%. As for the direction of production of special equipment, here we expect a decrease in costs by 15-20%, while the production capacity itself will be increased, which means that the range and volume of products will expand.

The industrial re-equipment program is a continuation of the global process of financial recovery and reorganization of the Concern, which was launched after the sale of 49% to private shareholders and the appointment of a new CEO at the end of January 2014. In 2013, Kalashnikov's loss amounted to 1.7 billion rubles. At the same time, according to the results of the first half of 2014, the production of small arms doubled to 60 thousand units, and the company was tasked with maintaining this dynamics and continuing to increase production volumes.

According to Sergei Chemezov, Izhevsk will become the main platform for the creation and serial production of modern small arms. The program for the development of the rifle industry until 2020, developed by the Rostec Group of Companies together with the Ministry of Industry and Trade, was approved and coordinated with all departments, direct customers and the Ministry of Industry.

2013: Revenue - just over RUB 2 billion

According to the results of 2013, revenue amounted to just over 2 billion rubles. In 2013, Kalashnikov's loss amounted to 1.7 billion rubles.

Notes