Investor's bulletin 3 2014

I nvestor ’ s B ulletin no.3 December 2014

ULYANOVSK REGION

SCHAEFFLER PLANT ENTERS INTO OPERATION IN ULYANOVSK REGION page 3

NEW PROJECTS OF MARS COMPANY IN ULYANOVSK REGION page 4

Dear colleagues and partners!

Dear friends!

Let us wholeheartedly wish you a very Merry Christmas and a Happy New Year!

In this holiday season we would like to thank all our partners and investors for the contribution they are making to the development of Ulyanovsk Region by bringing their business here.

Much has been achieved over the past year. Let us share with you some of the key events that had made 2014 a remarkable year.

First and foremost, this year we have acquired new partners. New members of our happy family include foreign companies, such as CCA  Engineering, Mycem, and Martur, and Russian companies - Sedrus, HC Kapital, Inprom Estate, Toreador, Darkat, Russtroy, Simbirsk-Pharma and Zeon.

Another important event for the region was the signing of an agreement with DEGA Group to create a private industrial park, which will conform to every applicable international standard.

The signing of an agreement took place in the presence of Dmitry Medvedev, Chairman of the Government of the Russian Federation.

Three companies have completed construction of their enterprises and launched production. These companies are Legrand, Schaeffler, and Mars. Bridgestone, Nemak, CCA Engineering, and Promtech Ulyanovsk have started the active stage of project implementation - construction.

This year we have completed the construction of engineering infrastructure for Zavolzhye Industrial Park.

We are planning grand new things for 2015, and we are confident that we will see them through to completion if we join our efforts. We are looking forward to continued cooperation next year.

Let the new year bring peace, joy, love and happiness into your homes! Let us wish you and your loved ones good health and well-being!

Happy holidays!

Dmitry Ryabov, Chairman of the Board of Directors

Sergey Vasin, CEO Ulyanovsk Region Development Corporation, JSC

ULYANOVSK REGION CELEBRATES INVESTOR DAY page 7

2

December 2014

HEADING EAST

Establishing Ties with South Korea

ROTOBO Representatives Visit Ulyanovsk Region

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n October, during a visit to South Korea, Sergey Vasin, CEO of the Ulyanovsk Region Development Corporation, and Park Ki-Sung, Head of the Seoul Technopark, signed a memorandum on cooperation.

The parties agreed to exchange experience in setting up industrial parks, and to work on joint projects.

The schedule of the business meeting also included a series of talks and B2B meetings with South Korean businesses.

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delegation of the Japan Association for Trade with Russia and New Independent States (ROTOBO) visited Ulyanovsk Region in September.

The delegation, which included representatives of the Association and various Japanese companies, studied the investment potential of the region, met with regional authorities and management of Ulyanovsk Region Development Corporation, visited Zavolzhye Industrial Park, DEGA Ulyanovsk Industrial Park, SEPZ (Special Economic Port Zone), and a number of enterprises - Haltech, DAAZ, Avtodetal Service, AeroComposit-Ulyanovsk, DMG Mori Seiki, Schaeffler, Takata, and the sites of Nemak and Bridgestone.

AFECC Invests in SEPZ Construction

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n October 13 Dmitry Medvedev, the Prime Minister of the Russian Federation, met with Li KeqĂ­ang, Premier of the PRC State Council. The parties signed a number of agreements on cooperation in the field of finance, energy and customs.

Ulyanovsk Region, represented by Governor Sergey Morozov, signed a Memorandum of Intentions in the sphere of investment project implementation with Anhui Foreign Economic

Construction Company (AFECC), a major international group of companies. Other parties in the

agreement included the Ulyanovsk Branch of OEZ, JSC and AAR Rus, LLC, a Russian company.

ULYANOVSK REGION DEVELOPMENT CORPORATION

The parties will cooperate on building the port zone infrastructure, including the hangar

complex of AAR Rus, attracting Chinese bank investments to finance the construction, and organizing tours for citizens of the People’s Republic of China to Ulyanovsk Region, including construction of a new hotel and tourism facility.

AFECC representatives said that Ulyanovsk Region has created a favorable investment climate for setting up new industrial enterprises, and that the region will be of considerable interest for Chinese tourists.

3

December 2014

LAUNCHING A PLANT

Schaeffler Plant Enters into operation in Ulyanovsk Region

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n October 10, the plant, located on the grounds of Zavolzhye Industrial Park, was opened in a special ceremony by Governor Sergey Morozov and the management of the company.

“Your company will become a reliable partner for companies in Ulyanovsk, and large Russian and international companies.

I am confident that your products will be in great demand and will help satisfy the evergrowing need for such products on today’s market of automobile components. Also, I am sure that the plant will become an important part of Ulyanovsk automobile industry sector,” Sergey Morozov said.

More than RUB 2 billion have been invested into the project. A total of some 450 new jobs will be created for local residents.

The participants took a tour of production facilities, and studied the plant’s products and technologies. The plant has been built with use of cutting-edge knowledge in production, transport and logistics, and met all applicable international safety and environmental standards.

Sergey Vasin, CEO of Ulyanovsk Region Development Corporation, said that the project will be expanded. “We expect that in 2015 the company will proceed to the next stage.”

Two production lines of the plant will make LuK clutch units and INA gearboxes.

The products will bear the “Made in Russia” sign. When the enterprise is up and running at full capacity in 2017, Schaeffler Company will localize in Ulyanovsk the production of 5 types of automobile parts and one type of industrial products: clutches, parts of automobile engines, gearboxes, belt drives, wheel bearings, and bearings and housings for railway applications.

“The opening of the new plant is an important step on the path to a stable future.

This development will help strengthen the company’s position on the market, bring it closer to the consumer, and allow us to adapt quickly to the needs of the market,” said

ULYANOVSK REGION DEVELOPMENT CORPORATION

This is the company’s first enterprise in Russia.

Heinrich Dietmar, head of the European Division of Schaeffler Company.

Schaeffler works with Ulyanovsk enterprises in the sector of services, and helps locate Russian suppliers for production line components, which is another promising dimension of cooperation for the regional business.

The company pays special attention to staff in-service training programs. Some of the employees of the Ulyanovsk Plant have already completed internships on enterprises in Germany, France, Hungary, Slovakia and the United Kingdom. The investor has been actively cooperating with Ulyanovsk Electromechanical College.

Technical specialists, such as engineers and electronical engineers who can speak foreign languages, are in high demand on the new enterprise.

4

December 2014

REGIONAL NEWS

New Projects of MARS Company in Ulyanovsk Region Packaging Section

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n October Mars opened a section that will produce packaging for pet food, and held a groundbreaking ceremony for the new Center of Pet Nutrition Studies.

The events were attended by Victoria Mars, Chairwoman of the Board of Mars Inc., Sergey Morozov, Governor of the Ulyanovsk Region, members of the Regional Government, representatives of Ulyanovsk Region Development Corporation, and employees of Mars.

“This project helped create some 40 new jobs for the Region, and this is very important for us, since Mars has been paying special attention to recruitment and development of local talent,” said Yusif Mekhtiyev, Director of the Pet Food Factory.

Construction of the new section, 1800 m2 in area, started in 2013. This plant will manufacture packaging for Mars pet food factories in Russia.

This section corresponds to all cutting-edge requirements for packaging of this type of products. Total investments

into this project amounted to RUB 440 million.

“Mars is one of the companies that once had started the history of Zavolzhye Industrial Park. As of today, some

20 large foreign and Russian companies either have already built or are building their production facilities on its territory.

The company became a sort of a “quality seal”

for the region, the benchmark for new investors coming here,” said Igor Ryabikov, first Deputy Director General of the Ulyanovsk Region Development Corporation.

The company has been operating in Ulyanovsk Region since 2007. Over this time the

company built a pet food plant and a chocolate factory. Total investments in these projects

amounted to some RUB 6 billion. More than 600 jobs for local residents have been created.

Center of Pet Nutrition Studies

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n the same day Victoria Mars and Sergey Morozov also participated in groundbreaking ceremony for the new Mars Center of Pet Nutrition Studies.

The Center will be the fourth such Mars facility in the world and the first of its kind in Russia.

The Center will support academic programs and innovative research on taste preferences of cats and dogs. The planned

amount of investments into the project is RUB 782 mln. The new facility will be launched in 2017.

“We value the HR potential of Ulyanovsk Region, and hope that our existing factories and the new facility will turn Mars into the leading talent development center in the region,” said Maxim Vasilevsky, Director of Corporate Relations of Mars Company, speaking at the ground-breaking ceremony.

ULYANOVSK REGION DEVELOPMENT CORPORATION

5

December 2014

REGIONAL NEWS

DMG Mori Seiki Project Half Done

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MG MORI SEIKI company has completed roof installation for the new machinery building plant in Ulyanovsk.

Employees and partners of DMG MORI SEIKI celebrated the important event with Richtfest, a traditional German ceremony. The ceremony celebrates the construction project by inviting project participants and associates, partners, clients and closest friends to mark the significant milestone in the construction process.

“Ulyanovsk Region is gradually regaining its former glory as a machinery building hub of Russia. The company has successfully completed an important stage in the construction of a new, modern machine building plant, which will build the machinery badly needed by our car and aircraft building companies,” Governor Sergey Morozov said.

ECOLINE high-performance and high-precision turning and milling machines will be delivered to aerospace and automobile manufacturers. Products of the Ulyanovsk-based company will be sold in Russia, Belarus and Kazakhstan.

Employees of Ulyanovsk Machinery Building Plant attended training at a subsidiary company of the concern in Poland. DMG MORI SEIKI has been actively cooperating with regional educational establishments.

“The plant in Ulyanovsk will manufacture up to 3000 pieces of machinery a year. As of today we have some 250 employees in Russia. By the end of the year their number will increase to 500 people, and most of them will work in Ulyanovsk. Each job at the plant will help create another 5 jobs for the region. We are also planning to cooperate with Ulyanovsk institutions of higher education to set up an Academy of Engineering Technologies,” said Rüdiger Kapitza, Chairman of the Board of Directors of the investor company.

The opening of the new plant has been scheduled for September 2015.

CCA Engineering Project Developing Actively

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s of today, the company has already set up its branch in the region, and is working on the project, compiling the necessary documentation for the construction project.

The ground-breaking ceremony for the future Training Center was held at Zavolzhye Industrial Park in August 2014.

The project involves construction of a modern office building, which will include classrooms, presentation rooms, cafes, restaurants, and a comfortable hotel. The project will require some RUB 680 mln of investments.

It will be implemented on the basis of Setcons, an innovative internet platform, which will provide access to all project documentation, meeting materials, information models for construction projects, design solutions and other construction documents at any time from anywhere in the world.

Working with Turkey

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n agreement to build a welding wire plant was signed

by Governor Sergey Morozov,

Sergey Vasin, CEO of Ulyanovsk Region Development Corporation, JSC, and General Director of Mycem Company Cem Atylgan.

Implementation of the first phase will cost some EUR 17-20 mln. This includes construction and equipment expenses. Some 120 jobs will be created. The production building, the welding laboratory and the Research Center will be located on the 2.6 hectar land plot.

“We chose Ulyanovsk Region because they have a well-organized industrial

ULYANOVSK REGION DEVELOPMENT CORPORATION

park here with many companies that have either already implemented their projects here or are working on them right now. Secondly, we have established a partnership relationship with the Government of the Region, which helps solve all the issues,” Cem Atylgan said.

Mycem Company will be developing the project jointly with Borkim A.S., its Turkish partner. The new production facility in Ulyanovsk Region, according to the investor’s estimates, will help capture some 1215% of the Russian market of welding wire. Some 41,000 tons of products a year will be manufactured.

Sergey Vasin, CEO of Ulyanovsk Region Development Corporation, JSC, said that the Instructional Center of the Company will train electric and gas welders for enterprises of Ulyanovsk Region. The graduates of the training program will be qualified to use all cutting-edge international technologies.

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December 2014

NEW PROJECTS

Steel Door Manufacturing Plant

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et another project underway at Zavolzhye Industrial Park is the steel door manufacturing plant by Toreador Active, LLC, a Russian company.

A total of RUB 100 mln will be invested into the project, and 70 new jobs will be created for local residents. Construction will commence in 2015 and complete in 2018.

New Private Industrial Park

HC Kapital will build an industrial complex in Zavolzhye

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he agreement to build the new facility was signed at International Investment Forum Sochi-2014 by Governor Sergey Morozov, Sergey Vasin, CEO of Ulyanovsk Region Development Corporation, and Mars Arslanov, Director of Kapital Holding Company (Tatarstan).

According to the project, four production buildings will be built in Zavolzhye Industrial Park. Each of the facilities will be 5,000 square meters in area.

Construction will begin in 2014, and will

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nprom Estate, a Russian company, will create a new industrial park on the grounds where the Ulyanovsk Radio Lamp Factory had once stood.

The Ulyanovsk Region Development Corporation will assist in attracting industrial enterprises to the new park, which will span 12,000 square meters.

The company plans to set up a venue that will correspond to every requirement of foreign and Russian investors.

ULYANOVSK REGION DEVELOPMENT CORPORATION

be completed by 2021. The first building is scheduled to be built before the end of 2015. The total amount of investments will exceed RUB 550 mln. “We are planning to implement the project in several stages. The first stage will require RUB 300 mln in investments. The new facility will house a number of large companies, including those from nearby Samara Region, Tatarstan and Mordovia. The project will create more than 300 jobs for local residents,� said Governor Sergey Morozov.

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December 2014

EVENTS

Ulyanovsk Region Celebrates Investor Day for the First Time Ever

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he event included a meeting of the Club of Investors, hosted by the Governor of the Region.

The meeting was attended by residents of Zavolzhye Regional Industrial Zone and representatives of the business community.

“The Club of investors will become a venue for developing and sharing proposals on improving the regional investment policy. It will become a place of informal discussions were we could exchange our takes on different problems, share success stories and best practices and work together to improve the business climate in the region,” Sergey Morozov said.

Investors asked the Governor about supporting business and expanding opportunities for implementing investment projects in the region. In particular, the participants discussed development prospects of social infrastructure, hotel business, and roads.

The Investor Day program in Ulyanovsk Region included a number of other thematic events. In particular, representatives

of public organizations, educational institutions, youth organizations and mass media visited the leading enterprises of Zavolzhsky and Zasviyazhsky Districts.

Employment agencies in every municipal district held job fairs where more than 60 potential employers presented more than 1,000 vacancies. In particular, residents of Zavolzhye Industrial Zone - Bridgestone, Schaeffler, DMG Mori Seiki, Legrand and a number of others - presented a total of some 100 vacancies.

The main goal of all activities during the Investor day is to demonstrate to the region’s population concrete results new, modernized and reconstructed enterprises, said Alexander Smekalin, First Deputy Chairman of Ulyanovsk Regional Government.

Employees of the Nanocenter held a tour of the facility and introduced the

ULYANOVSK REGION DEVELOPMENT CORPORATION

visitors to innovative projects of startup companies.

Alexey Alexeev, Director for Marketing and Sales of Ulyanovsk Machine-Building Plant, LLC told about DMG Mori Seiki project: “This project is special because Ulyanovsk Region will now have a full cycle machine-building enterprise. We have been actively working with local universities on organizing training programs financed by our company. Some of the training will be carried out at foreign enterprises of the concern. Today the production facility employs 45 people, when the plant is launched, there will be more than 250 new jobs created. The concern has a long established practice of “Open Days,” when the enterprise opens its doors to the general public for an entire week. We will introduce the same practice at the Ulyanovsk Plant, too.”

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December 2014

SOCIAL PROJECT

FRIENDSHIP WINS

“Let’s Join Hands, Residents!”

First Charity Athletic Relay Race

M Park,

ore than 80 athletes, representing Zavolzhye Industrial

Ulyanovsk

and

affiliated

companies

MetalComposite, TestGen, and Innovatsii Trade.

Region

Some of the participants

Corporation

were new to the running world,

and the regional government,

and others were professional

took

event.

marathon runners. For instance,

were

the Chief Electrician of Legrand

Development part

Industrial represented

in

the

enterprises

Mori

enterprise in Ulyanovsk, Jean-

Seiki, Nemak, Schaeffler, Efes,

by

DMG

Jacques Poitiers, has been

Legrand, Alright-IT, Ulnanotech

running marathons of up to 21

Center of Nanotechnologies,

km and more. “I have been living

in Ulyanovsk for three years, and I try to attend all sport events. I think it is a great idea to hold a competition among the residents of Zavolzhye. I think this event must be repeated again next year and will be even more representative.”

Mikhail Volkov, General Director of Schaeffler Plant in Ulyanovsk, who also took part in the race, said: “Our employees enthusiastically supported the idea, there are seven of us here, we want to get to know other residents of the industrial zone, and I sincerely hope that the time that we spent together, will help us get to know each other better.”

“The real winner is friendship,” said Sergey Vasin, CEO of the Ulyanovsk Region Development Corporation at the award ceremony. “We have seen participants from different countries, of different

nationalities, speaking different languages, understand each other well and support each other. We hope that this first event will give an impetus to further communication between companies and lead to implementation of joint projects.”

The money raised during the charity relay was transferred to the Regional Boarding School for Children with Central Nervous System Conditions. The money was used to purchase medical equipment – bactericidal air recirculators.

Publisher: Ulyanovsk Region Development Corporation, JSC. Editorial board: Sergey Vasin, Igor Ryabikov, Tatiana Fadeeva. Editor: Tatiana Fadeeva.

Design & production: Accent Creative Agency. Publisher’s address: 41 Ryleeva Street, Ulyanovsk, Russia. Tel.: +7 8422 73 70 01, ext. 118. E-mail: pr@ulregon.com

ULYANOVSK REGION DEVELOPMENT CORPORATION