Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
MAGNOLIYA
Project Information Memorandum
MODERNIZATION OF CASTING
PRODUCTION
Naberezhnye Chelny
2015
Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Project Description
Project Description
 The aim of the project is the revamping of the existing production. During the project implementation, the production capacity
is to be increased from 40 tons to 145 tons of castings per month. Production load will be increased from 25% to 60%.
 The current stage of the project is the revamping based on the current production.
 The project is to be implemented in Naberezhnye Chelny, the Republic of Tatarstan.
 The project implementation will ensure the following:
1. Occupy up to 30% of a casting market share in the Republic of Tatarstan;
2. Lower energy consumption by 20-25 %;
3. Reduce reject level by 2 times to comply with РРМ 0,01 standard;
4. Getting new customers i.e. car manufacturers as after the revamping has been completed the manufactured products will
meet all the requirements of global car manufacturers;
5. Participation in the programs on localization of car components deliveries to foreign car manufacturers in the RF territory.
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Project Summary. Project key financial figures
Net present value (NPV)
Positive NPV values indicate the feasibility of the
investments in the Project
29,865 mln.rub.
Internal rate of return (IRR)
23%
Payback period (РВР)
3,3 years
Discounted payback period (DPBP):
4,4 years
Profitability index (PI)
Profitability index (PI)
For the forecasting period: 1,17
Conclusion
The obtained results of the Project rate of return also
indicate its investment prospects as the Project IRR
exceeds the value of weighted average cost of capital
within the forecasting period
PBP does not exceed the total payback period
PBP and DPBP take into account the costs for servicing
foreign loans by means of interest payment
DPBP is within the scope of the forecasting period
PI value is greater than one that speaks for acceptable level
of revenues generated by the Project for one unit of
investment
With amounts of revenues and costs allowed for calculations, the Project is effective and financially
valid with average risks
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Project Summary
Project Implementation Strategy
 According to the existing Project Implementation plan, the investment phase will amount to eight months as from the moment of
the beginning of financing of the Project to the moment of putting the equipment into operation;
 Purchase and supply of equipment are expected within the sixth month of the first year, and commissioning – within the seventh
month of the first year;
 The system of autonomous heating and recycling water supply system is to be implemented within the eleventh month of the first
year;
 As from the ninth month of the first year the production based on installed production capacities;
 With full utilization of production capacities planned by the Project within twenty seventh month of the third year, the cumulative
production will amount to more than 4.5 mln. pcs. per year.
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Project Summary
Overall Schedule of the Project Implementation
Start of financing
of the Project
Reaching the
Project capacity
Putting the facility into
operation
1 year
Project
implementation
milestones
I
II
2 years
III
IV
I
II
III
3 years
IV
I
II
4 years
III
IV
I
II
III
5 years
IV
I
II
III
IV
1
2
3
4
5
6
7
8
9
10 11 12 13-15 16-18 19-21 22-24 25
26 27 28-30 31-33 34-36 37-39 40-42 43-45 46-48 49-51 52-54 55-57 58-60
mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon. mon.
1.
Implementation
of autonomous
heating and
recycling water
supply system
2. Purchase and
supply of
equipment
3.Commissioning
4. Putting the
equipment into
operation
5. Reaching the
project capacity
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Project Summary
Value of the Project and financing requirements
Total value of the Investment Project
197 206 thousand rubles including :
14 120 thousand rubles – implementation of energy saving technologies
183 086 thousand rubles – purchase of equipment
Estimated sources of financing of the Project (Financing structure)
 Project is to be financed by means of debt/shared financing by investor as well as by means of proprietary funds of the Project
promoter as follows:
• 90 % financing by investor
• 10 % proprietary funds
Amount of investments in the Project
Currently, the Project is not financed
Amount of required additional financing of the Investment Project
 Attraction of debt financing is to be equal to 177 485 thousand rubles at the investor’s expense subject to:
• investment term 4,5 years
• interest rate 12 %
• interest accrual period 4,5 years
• grace-period for payment of interest and for principal debt is 12 months
• securing – share pledge in capital; existing equipment and equipment to be purchased; production facilities
 Attraction of shared financing: sale of продажа до 49 % of company assets with buy-back option; returns by agreement
 Attraction of the Project Promoter’s funds is to be equal to 19 721 thousand rubles.
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Project Summary. Value of the Project and financing requirements
Total value of the Investment Project (at nominal values) inclusive of VAT
Amount,
thousand rubles
197 206
14 120
Description of indicators
Total value of the Investment Project
Implementation of energy saving technologies
Purchase of equipment
183 086
Structure, %
100%
7,2%
92,8%
Financing structure
Amount,
thousand rubles
Structure, %
Total value of the Investment Project
197 206
100%
Project Promoter’s proprietary funds
19 721
10%
Implementation of energy saving technologies
14 120
71,6%
Purchase of equipment
5 601
28,4%
177 485
90%
-
-
177 485
100%
177 485
90%
Description of indicators
Project financing by Investor
Implementation of energy saving technologies
Purchase of equipment
Financing requirements (attracted investments)
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Project major participants’ profile
Major Project participants
Naberezhnochelninskiy Casting and mechanical plant «Magnoliya» (NCMP «Magnoliya») is both a company implementing the
project and the main recipient of funds.
The company was founded in 2009.
Registered address: 423810 Russia, the Republic of Tatarstan, Naberezhnye Chelny, b-r A.Rubaneko, bld. 12, porch 2
INN 1650186379 OGRN 1081650019450
Размер уставного капитала НЛМЗ «Магнолия» составляет 10 000 руб.
Учредитель - физ.лицо 100%
NCMP «Magnoliya» comprises three companies: asset holder – LLC «Avtotzvetlit», a production company, and holder of the
contract with OJSC «KAMAZ» – LLC «Magnoliya-S» and sales company LLC «Magnoliya».
Principal activities of the company – manufacturing of aluminum castings in chills and in sand for various industries.
Current owner (S.V. Mayorov) bought NCMP «Magnoliya» in 2009 to work under contract with «DeLonghi». However,
company «Delonghi» decided to close the production within the RF territory as a result of amendments to the legislation.
At the moment, NCMP «Magnoliya» manufactures car components (main customer – OJSC «KAMAZ»), castings for domestic
needs, develops and manufactures aluminum radiators and accessories for LED lighting fixtures, as well as manufactures energy saving
LED lighting fixtures for Housing and Public Utilities needs.
As from the moment of the purchase of the company, the owner has the production being revamped by purchasing the
equipment.
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Project major participants’ profile
Basic financial indicators of NCMP «Magnoliya» (consolidated balance sheet)
thous. rub.
2009
2010
2011
2012
2013
Assets
69 906
84 900
97 596
110 374
113 121
Permanent assets
Licenses
66 317
79 879
91 279
100 779
102 956
-
-
-
-
-
-
-
-
-
-
Capital
55 971
64 791
75 556
81 614
84 321
Long-term credits
6 006
6 860
10 289
7 557
0
20 584
0
25 239
0
28 880
Proceeds
12 734
16 125
36 450
52 090
49 496
Operating expenses (net of depreciation)
11 676
13 591
34 062
49 419
47 877
Sales profit
1 058
2 534
2 388
2 671
1 619
8%
176
16%
1 035
7%
942
5%
870
3%
1 805
1 234
3 569
3 330
3 541
3 424
10%
22%
9%
7%
7%
Interest accrued
934
2 380
1 924
900
184
Net profit
75
101
371
1 416
988
net profit margin, %
1%
1%
1%
3%
2%
Indicators
Basic balance sheet indicators
Investments
Short-term credits
Basic indicators of Profit and Loss Statement
profit margin, %
Depreciation
EBITDA
EBITDA margin, %
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Project major participants’ profile
Project major participants
Main suppliers of the equipment to be purchased:
1. LLC «Skayer», St. Petersburg.
2. «ЗD Invest», Moscow.
3. LLC «Pumori-Engineering Invest», Yekaterinburg.
4. LLC «Ruskontrol», Moscow.
5. LLC «Tebova-Nur», Switzerland.
Main products consumers :
OJSC «KAMAZ» in Naberezhnye Chelny, Republic of Tatarstan, and joint ventures therewith, enterprises of machine-building, shipbuilding, aircraft-building and instrument-making industries, and of defense complex, manufacturers of household appliances and
energy-saving LED lighting fixtures.
Main feedstock/services suppliers :
OJSC «Plant for Aluminum Alloys», Moscow Region.
LLC «Prom-Garant», Ulyanovsk Region.
LLC «Bastion», Ulyanovsk.
LLC «VtorTzvetLit», Orenburg Region, Orsk.
LLC «KTA.LES», Arkhangelsk Region, Severodvinsk.
No difficulties are expected after the revamping of the production, with the amount of feedstock to be purchased being
increased.
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Product description
Special features of manufacture of aluminum castings
Castings manufactured by injection molding feature surface smoothness and accuracy. Size tolerances are within ±0.075 to
±0.18 mm. Injection molding is economically feasible for large-scale and mass production of precision castings from aluminum
alloys. Injection molding ensure manufacturing of details with special properties such as increase sealing capacity, wear and
oxidation resistance etc. This casting method is widely used in car and aircraft industries as well as in electrical engineering
industry.
Castings manufactured by chill casting feature high durability and sealing capacity being of critical importance in view of
applications of aluminum alloys in machine building. Major advantages of aluminum are lightness, high corrosion resistance and
high durability.
Sand casting is relatively easy and economical production process. This method is mostly often used in mass castings
production in various industries (car building, machine tool building, railway car building etc.).
Aluminum radiator of LED
lighting fixture for Housing and
Public Utilities
Injection Molding
Pump casing IYuASh 40611307015 (for UAZ cars)
Chill Casting
Casing 37.1702209-200
for transmission gearbox in
KAMAZ and Nefaz trucks
Sand Casting
Cover for fine fuel filter
(fuel system of KAMAZ trucks)
Injection molding
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Product description
Main product groups are as follows:
1. Car components (85% in total revenue): flange, detent DBISh, cover for fine fuel filter, cover FOG, cover DFIA, cover DBISh,
lever LCD, baseplate LCD, support ring, casing DFIA, casing DBISh, connecting rod, grid DBISh – all the details are already
manufactured at the current production facilities.
2. Accessories for LED lighting fixtures and LED lighting fixtures for Housing and Public Utilities needs (15% in total revenue):
assembly set for LED lighting fixtures for housing and public utilities, LED lighting fixture SvBO 01-14-004 (being in production); a
consumer grade assembly set and a consumer grade LED lighting fixture for Housing and Public Utilities needs, assembly set for a
LED lighting fixture and lighting fixture US-180-1 for illumination of motor ways.
Main competitive advantages of the products are as follows:
1. Availability of in-house casting production.
2. Competitive price ensured by using in-house accessories and absence of logistic costs.
3. Development of lighting fixtures together with LED manufacturers.
4. The amount of monthly processing will be increased from 40 to 145tons per month.
5. PPM (rejection rate) will be equal to 0.01.
6. Internal rejection will be reduced from 5 to 3.5%.
7. Energy saving through reducing energy consumption by 20-25 %.
8. Mastering of new products will be reduced from 12 to 3 months.
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Production management principle
One-stop principle
1. Development of design and technical
documentation
2. Manufacture of die molds
3. Aluminum casting by injection
molding, in chills and in sand
4. Machining (machine working)
5. Accessories assembling
6. Finished products
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Additional information on the Project. Existing casting equipment
No.
Description of equipment
Quantity,
pcs.
Locking pressure, tons
Country of origin
1
Injection-molding machine TST-400
1
400
Switzerland
2
Casting machine MLD A71107
1
160
Russia
3
Casting machine MLD A71108
2
240
Russia
4
Casting machine MLD A71109
2
400
Russia
5
Casting machine MLD A71110
2
630
Russia
TOTAL:
8
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Additional information on the Project
Equipment to be purchased
No.
Equipment
Quantity (pcs.)
Amount (thous. rub.)
1
X-ray apparatus RPD 200
1
10 016, 00
2
Coordinate measuring machine Axiom too 600 CNC
1
2 702, 29
3
Machining center M650 R AIS
1
6 780, 00
4
Casting package TST 250 K
2
43 365, 00
5
Casting package TST 400 K
4
101 407, 00
6
Aluminum melting furnace - TA 200/12 K
3
1 535, 10
7
Express laboratory FVN-F20 CNR Italia
1
2 070, 00
8
Universal milling machine FUV 401
1
4 070, 00
9
Surface grinder 3Д725
1
5 470, 00
10
Internal grinder
1
16
5 670, 00
183 085, 39
TOTAL:
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Additional information on the Project
Comparative analysis of basic units of existing equipment and those of equipment to be purchased
No.
1.
1.1.
1.2.
1.3.
1.4.
Indicator/description
Value
New equipment:
Description
Value
Effect of revamping
Casting equipment
Casting package TST-400K (manufacturer: Swiss
company Tebova-Nur, with its production facilities
located in Kazan)
Electric energy consumption
Electric energy consumption
(kW/h)
48
(kW/h)
22
%% of rejection
17
%% of rejection
5
Number of castings per hour
Number of castings per hour
(pcs.)
18
(pcs.)
65
Casting package TST-400K (manufacturer: Swiss
Injection molding machine, Model 71109 (Terraspol,
company Tebova-Nur, with its production facilities
Moldavskaya SSR), year of manufacture: 1986
located in Kazan)
Electric energy consumption
Electric energy consumption
(kW/h)
28
(kW/h)
22
%% of rejection
15
%% of rejection
5
Number of castings per hour
Number of castings per hour
(pcs.)
42
(pcs.)
65
Injection molding machine,
Casting package TST-250K (manufacturer: Swiss
Model7А1108, year of
company Tebova-Nur, with its production facilities
manufacture: 1980
located in Kazan)
Electric energy consumption
Electric energy consumption
(kW/h)
28
(kW/h)
22
%% of rejection
15
%% of rejection
5
Number of castings per hour
Number of castings per hour
(pcs.)
45
(pcs.)
65
Casting package TST-400K (manufacturer: Swiss
Injection molding machine М711А07 (Terraspol, Moldavskaya
company Tebova-Nur, with its production facilities
SSR), year of manufacture: 1989
located in Kazan)
Electric energy consumption
Electric energy consumption
(kW/h)
18
(kW/h)
22
%% of rejection
10
%% of rejection
5
Number of castings per hour
Number of castings per hour
(pcs.)
80
(pcs.)
65
Casting machine, Model А711А10 (Terraspol, Moldavskaya
SSR), year of manufacture: 1980
-26
-12
47
-6
-10
23
-6
-10
20
-4
-5
-15
Continued 16
Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Additional information on the Project
Comparative analysis of basic units of existing equipment and those of equipment to be purchased
No.
1.5.
Indicator/description
Furnace CAT-01
Electric energy consumption
(kW/h)
%% of rejection
Number of castings per hour
(pcs.)
2.
2.1.
40
200
New equipment:
Description
Value
Melting furnace - ТА 200/12К (LLC «TermKontzept»,
Moscow, Russia)
Electric energy consumption
(kW/h)
36
%% of rejection
Number of castings per hour
(pcs.)
300
Effect of revamping
-4
100
Milling equipment
Vertical milling machine 6Р82G, 1989, Vladimir
Electric energy consumption
(kW/h)
2.2.
Value
10
Universal milling machine FUV 401(LLC «Stankolit»,
Kazan, Republic of Tatarstan, Russian Federation)
Electric energy consumption
(kW/h)
11
1
%% of rejection
3
%% of rejection
2
Number of castings per hour
Number of castings per hour
(pcs.)
20
(pcs.)
25
Internal grinding machine 3А229(Russia), year of manufacture: Internal grinding machine (LLC «Stankolit», Kazan,
1989
Republic of Tatarstan, Russian Federation)
Electric energy consumption
Electric energy consumption
(kW/h)
11
(kW/h)
11
-1
%% of rejection
Number of castings per hour
(pcs.)
2
0
-
-
2
-
%% of rejection
Number of castings per hour
(pcs.)
5
0
The equipment to be purchased consumes less electric energy, has greater productivity and lower rejection percentage if compared
with the existing equipment. Therefore, the purchase of new equipment will enable to increase the business return.
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Market analysis
Aluminum casting market in the Republic of Tatarstan:
Aluminum casting occupies a special niche in modern metallurgical industry owing to the fact that the application of aluminum
castings is immensely varied. Castings are applied in manufacturing of all kinds of machines, household appliances, furniture, bathroom and
lavatory equipment, utensils and in other manufactures. At present, injection molding is an irreplaceable method when manufacturing of a
detail by any other methods is impossible due to its complete configuration. In addition, manufacturing of small light details for various needs
by injection molding is also popular.
In Tatarstan, aluminum casting is performed by 20 enterprises. NCMP «Magnoliya» comes in second in terms of production capacity
after «KAMAZ-Metallurgiya» in the Republic of Tatarstan. The amount of monthly processing can reach up to 200tons of aluminum alloy
(current production load being 45% due to obsolescence of the equipment).
Main casting enterprises of the Republic of Tatarstan are as follows: «KAMAZ-Metallurgiya», Naberezhnye Chelny, «Miras»,
Naberezhnye Chelny, «Kazan Electrical Engineering Plant», Kazan, «Zelenodolskiy Plant named after Gorky», Zelenodolsk, and «Kazan
Optical Mechanics Plant», Kazan.
Most large car manufacturers have their own casting production; however, due to high expenses in the manufacturing of castings,
considerable volume thereof is outsourced. Consequently, with the revamping completed, NCMP «Magnoliya» will be the only updated
casting production facility in the Republic of Tatarstan.
There are competitors specializing in aluminum casting in Volga Federal District such as LLC «Casting Plant «RosALit», Zavolzhye,
LLC PKF «Vershina», Samara, and OJSC «Ulyanovsk Motor Production Plant», Ulyanovsk. All the other casting manufacturers specialize in
casting both from aluminum and steel, cast iron and brass. In this regard these companies do not have the set of equipment that will be installed
in NCMP «Magnoliya» after the revamping of production.
Company name
City
LLC «Casting Plant Zavolzhye
«RosALit»
LLC PKF «Vershina»
Samara
OJSC
«Ulyanovsk Ulyanovsk
Motor
Production
Plant» (GAZ Group)
Company
website
www.rosalit.ru
www.vershinasplav.ru
umz.gaz.ru
Activity description
Production specialization – aluminum casting in chills, high-pressure and low-pressure
casting. Generally, the company manufactures details for car industry.
Production specialization – casting and stamping production in three directions:
production of aluminum alloys; production of details’ cast sections; production of
details’ forged stock.
One of the largest enterprises of the Russian machine-building complex manufacturing
motors of various modifications for trucks, passenger cars and multipurpose vehicles of
cross-country type of GAZ and UAZ brands.
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Market analysis
Sales analysis of car components and other products:
For two years LLC «Magnoliya» was a supplier for Company Delonghi (Italy) until the termination of the production of
«KENWOOD» meat mincing machine in the city of Yelabuga.
The company supplied products for enterprise of the defense industry complex OJSC AOKB «Impuls», city of Arzamas, as well as
received a positive audit conclusion of OJSC «KAMAZ» in April 2011 thus becoming a products supplier to the main conveyer thereof.
There are letters of appreciation from OJSC «KAMAZ» (Category А – best supplier), «Delonghi» (Italy), SEZ «Alabuga», OJSC AOKB
«Impuls», city of Arzamas, LLC «Startprom», city of Izhevsk, OJSC «RIAT», city of Naberezhnye Chelny, NPO «Rostar», city of
Naberezhnye Chelny and many others.
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Market analysis
Current contract before the end of 2015 at the foundry products at car components
No.
Company
City
Casting description
1.
LLC «Startprom», cooperation: 3 years
Mozhga
2.
OJSC «KAMAZ», cooperation: 3 years.
Nab.Chelny
Support rings, sleeves (from 20 thous. pcs. per month)
3.
LLC PKF «AMTK», cooperation: over 10
years
Nab. Chelny
Flanges А 830-359290 (24/24) (from 1000 pcs. per month)
4.
LLC «ArSiEr», cooperation: 2 years
Nab.Chelny
Casing 412-1703009, left cover 530-1702214 LCh, coverа 530-1702228 LCh,
gear control lever support 530-1702209 LCh, adaptor 530-170-2219 LCh (as per
monthly inquiry)
5.
LLC «KZTAA», cooperation: 5 years
Nab. Chelny
Flanges 661-3519293 (30/24), as per monthly inquiry
6.
LLC NPP «Nira», cooperation: 4 years
Kazan
7.
LLC «Kamek plyus»
8.
LLC «Ardatovsky Illuminating Equipment
Production Plant», cooperation: since 2013
Republic of
Mordovia,
w.s.Turgenevo
9.
OJSC «Ashasvetotekhnika», cooperation:
since 2013
Asha
10.
OJSC AOKB «Impuls», cooperaton: 3 years
Arzamas
Casing of pump IYuLSh 4061-1307015
11.
OJSC «Energy Saving Technologies»,
cooperation: since 2013
Samara
Radiator SUS (as per monthly inquiry)
12.
LLC «KamAvtoTekhTzentr», cooperation:
since 2012
Nab. Chelny
Nab.Chelny
Lever 012 (from 20 thous. pcs. per month, baseplate 011 (from 15 thous. pcs. per
month), baseplate 01 (from 10 thous. pcs. per month)
Casing NT8.020.024, casing NT8.020.010, casing NT8.020.022, casing
NT8.020.026, connection rods NT8.350.019, connection rods NT8.350.023,
connection rods NT8.350.020, connection rods NT8.350.022
Fine fuel filter cover 740.21-1117028 (as per monthly inquiry)
Casing DFIA, cover DFIA (from 600 pcs. per month)
Cover DBISh, flange DBISh, detent DBISh, cable coupling DBISh, grid DBISh,
casing DBISh (as per monthly inquiry)
Protective casing 2113-3701640 (as per monthly inquiry)
After upgrading the foundry plans to further cooperation with these companies, as well an increase in the supply of foundry
products.
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Market analysis
Current negotiations
At present, negotiations on possible cooperation are in progress with such companies as:
- Toyota (Japan, Leningrad Region)
- Ford Sollers (USA, Naberezhnye Chelny and Yelabuga)
- Federal Mogul Naberezhnye Chelny (USA, Naberezhnye Chelny)
- Cummins-Kama (USA, Naberezhnye Chelny)
- KAMAZ and Marcopolo (Brazil, Naberezhnye Chelny)
- KAMAZ and CNH (Italy, Naberezhnye Chelny)
- Fuso KAMAZ Trucks Rus (Japan, Naberezhnye Chelny).
Negotiations on price settlement are in progress with such companies as:
- Knorr-Bremse (Germany, Naberezhnye Chelny)
- ZF Kama (Germany, Naberezhnye Chelny).
Naberezhnochelninskiy Casting and Mechanical Plant «Magnoliya» develops and manufactures aluminum radiators,
components for LED lighting fixtures and energy saving LED lighting fixtures for Housing and Public Utilities needs.
Company marketing area:
Led lighting fixtures SvBO 01-14-004 manufactured by LLC «Magnoliya» and intended for illumination of welfare and
public spaces, are installed in new residential houses in Zamelekesye district in the city of Naberezhnye Chelny.
NCMP «Magnoliya» was entered on the register of nano producers of the Russian Federation and the Republic of Tatarstan.
The company also became a member of Kamsky innovative territorial-production cluster in the framework of the selection of pilot
projects on the development of territorial clusters and mechanisms of State support for such clusters.
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Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Market analysis
Marketing area
Assembly sets for LED lighting fixtures to be installed in Housing and Public Utilities Sector were supplied to more than 100
LED lighting fixtures manufacturers of various regions of the Russian Federation.
Contracts for monthly delivery of assembly sets for fabrication of LED lighting fixtures were concluded with the following
companies:
1.
LLC «Ledel», Republic of Tatarstan, Kazan (from 1000 pcs. per month). Cooperation since 2012.
2.
LLC «Svetovod», Russia, Moscow (from 250 pcs. per month). Cooperation since 2012.
3.
LLC «Gamayun», Orenburg, (from 200 pcs. per month). Cooperation since 2013.
4.
LLC «KiTLait», Moscow, (from 400 pcs. per month). Cooperation since 2013.
5.
LLC «New Source of Light», Perm, (from 100 pcs. per month). Cooperation since 2013.
6.
LLC «LaitSvet», Moscow, (from 1000 pcs. per month). Cooperation since 2013.
7.
LLC «SPK», Ulyanovsk (from 200 pcs. per month). Cooperation since 2014.
8.
Unitary Enterprise Svetopribor OO «BelTIZ», Belarus, Minsk (from 100 pcs. per month). Cooperation since 2014.
9.
LwLC «Mailuu-Suuisky lamp Production Plant», Kyrgyzstan, Mailuu-Suu (from 300 pcs. per month). Cooperation since 2014.
Competition on LED lighting fixtures market is estimated to be average.
Major competitors are Chinese producers having the possibility of dumping. However, the quality offered by Chinese producers is
considerably lower than that offered by NCMP «Magnoliya».
A LED lighting fixture radiator is specially designed for sufficient heat removal from LEDs and is made of aluminum. The
radiator features wear resistance and anti-vandal design. The design of LED lighting fixtures ensures high resistance to impacts and
vibration, and the installation method provides for antitheft protection.
22
Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Market analysis
Marketing area
LED lighting fixtures and assembly sets manufactured by NCMP «Magnoliya» have
the following characteristics:
 Consumed power not more than
14 W;
 No need of maintenance service;
Assembly set for lighting fixture for
Housing and Public Utilities needs
 Anti-vandal design;
 Service life not less than 50 000;
 Natural light excludes eye fatigue;
 Immediate on and off without limitation of number of times;
 Absence of stroboscope effect (twinkling);
 Capability of integration of any sensors (movement and sound sensors etc.).
Low price for a similar LED lighting fixture from Chinese producers is obtained by
cost savings in materials and components, by simplification of electric schemes and through
using of low-qualified labor.
LED lighting fixture SvBO for
Housing and Public Utilities needs
Excessive saving results in the loss of quality of a lighting fixture itself: nonconformity with declared technical specifications, overheating and burnout of LEDs, loss of
casing tightness, poor brazing of contacts, service life reduction, etc., as well as nonadapted circuit design, absence of appropriate documentation, absence of integrated
approach for implementation of large-scale projects on lighting, absence of warranties and
service maintenance.
LED lighting fixture SvBO
(suspended) for Housing and Public
Utilities needs
23
Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Sales plan and marketing strategy
The following sales plan is specified while implementing the Project:
1. Product portfolio policy: 85% of the proceeds will be car components (flange, detent DBISh, cover for fine fuel filter, cover FOG,
cover DFIA, cover DBISh, lever LCD, baseplate LCD, support ring, casing DFIA, casing DBISh, connecting rod, grid DBISh). In this
category, major sales are accounted for the following products: lever LCD, baseplate LCD, support ring, casing DFIA, casing DBISh.
2. 15% of the proceeds will be assembly sets for LED lighting fixture for Housing and Public Utilities, LED lighting fixture SvBO 0114-004, low-cost assembly set and low-cost LED lighting fixture for Housing and Public Utilities needs, assembly set for LED
lighting fixture and lighting fixture for illumination of motorways – US-180-1.
3. Overall production under full utilization of production capacities will amount to 4 574 880 items per year (330 221 thous. rub.)
4. The utilization of capacities will be as follows: 1 year -25%, 2 year -57%, 3 and subsequent years - 60%.
Pricing policy:
Anticipated prices for already manufacture products are based on the current level, and those for new products are based on
midmarket prices.
Price increase for the products is included according to the official data on the inflation in the manufacturing industry.
Sources:
- Estimation of social and economic development of the Russian Federation over the period up to 2030 (Ministry of economic
development and trade of the Russian Federation dd. 08.11.2013).
- Scenario conditions, basic parameters of the estimation of social and economic development of the Russian Federation, and
overall price levels (tariffs) for services of companies of infrastructure sector for 2015 and for the planned period of 2016 and 2017
(Ministry of economic development and trade of the Russian Federation dd. 20.05.2014).
Rate of price increase for products 2014
2015
2016
2017
2018
2019
2020
rate of increase, % 5,6%
4,7%
4,7%
4,5%
4,1%
3,6%
3,2%
24
Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Sales plan and marketing strategy
Marketing strategy of the enterprise
Main channels of dissemination of product information: company registration on various information websites, information layout
in social networks, placement of advertising articles in specialized magazines, participation in all-Russian and International exhibitions
and forums.
The main goal in the field of quality is the manufacture of products satisfying the requirements and expectations of consumers and
ensuring stable financial position of the organization.
Objects to achieve the goal:

Systematic analysis of current and challenging consumers’ requirements and expectations and assessment of their satisfaction by
our products;

Continuous personnel training in the field of quality, engaging every employee in the improvement of manufacturing process of
quality products, personnel motivation in order to develop creative abilities thereof and engage them in the process of continuous
improvement of manufactured product quality.

Implementation of modern methods of product development and advanced technologies intended for defect prevention, increase
of stability of production processes and product quality.
Analysis of product quality system (work, services)
At the moment, the enterprise has implemented Quality management System to comply with GOST R ISO 9001-2008 (ISO
9001:2008) requirements. Registration number: РОСС RU.ИК79.К00273. Validity: till 30.11.2015.
There has been developed a program on the implementation and preparation for the Quality Management System certification to
comply with international standard ISO/TU 16949. According to the contract with Certification Association «Russian Registr» of LLC
«RR-Povolzhye», the first stage of the Quality Management System certification inspection was successfully passed on 16 May, 2014.
The second stage of the certification inspection will be carried out at the end of July, 2014. Approximate receipt of certificate ISO/TU
16949 is planned in August, 2014.
Lean Production Concept including 5 S Kaizen ТРМ has been developed and implemented since 2011.
25
Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Production plan
Sales plan in kind in terms of products
Production capacities
Flange 830-3519290 (24/24)
Flange 830-3519190 (20/20)
Casing 412-1703009
Adaptor 530-1702219 LCh
Cover 530-1702228 LCh
Left cover 530-1702214 LCh
Gear control lever support 530-1702209 LCh
Cover for fine fuel filter 740.21-1117028
Cover for fine fuel filter 740.21-1117028 (new)
Cover FOG
Radiator (radiator SUS)
US-200
US-170
Lever LSD 5025.000.025
Baseplate LSD 5025.000.011
Baseplate LSD 5020.006.001
Lever LSD 5029М.003.001
Lever LSD 5029М.004.001
Support ring 43114-3124036-03
Casing DFIA 725213.022(TKh-082.012 KE)
Cover DFIA 725213.021-02 (TKh-082.011 KE)
Socket cover DBISh 724222.001
Flange DBISh 712291.002
Grid DBISh 752612.001
Casing DBISh 731243.003
Casing DBISh 724261.003
Cover DBI 711528.004
Ring DBISh 711.243.008
Cable coupling DBISh 752282.009
Supporting flange DBISh 711548.001
Detent DBISh 753415.002L
Unit of
meas-ent
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
pcs.
2014
2015
2016
2017
2018
17 610
19 762
21 328
9 588
9 588
9 588
9 588
29 350
12 523
10 957
8 414
763
763
113 487
133 053
197 623
170 230
170 230
125 227
9 783
9 783
93 920
25 632
11 740
11 740
14 479
8 609
7 435
46 960
24 458
27 002
47 153
52 890
57 080
25 660
25 660
25 660
25 660
78 550
33 515
29 325
22 518
2 042
2 042
303 727
356 093
528 903
455 590
455 590
335 147
26 183
26 183
251 360
68 600
31 420
31 420
38 751
23 041
19 899
125 680
65 458
72 266
53 775
60 348
65 128
29 278
29 278
29 278
29 278
89 625
38 240
33 460
25 693
2 330
2 330
346 550
406 300
603 475
519 825
519 825
382 400
29 875
29 875
286 800
78 273
35 850
35 850
44 215
26 290
22 705
143 400
74 688
82 455
54 000
60 600
65 400
29 400
29 400
29 400
29 400
90 000
38 400
33 600
25 800
2 340
2 340
348 000
408 000
606 000
522 000
522 000
384 000
30 000
30 000
288 000
78 600
36 000
36 000
44 400
26 400
22 800
144 000
75 000
82 800
54 000
60 600
65 400
29 400
29 400
29 400
29 400
90 000
38 400
33 600
25 800
2 340
2 340
348 000
408 000
606 000
522 000
522 000
384 000
30 000
30 000
288 000
78 600
36 000
36 000
44 400
26 400
22 800
144 000
75 000
82 800
Continued
26
Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Production plan (sales plan in kind in terms of products)
Sales plan in kind in terms of products
Production capacities
Unit of meas-ent
2014
2015
2016
2017
2018
Cover DBISh 753415.001
pcs.
15 849
42 417
48 398
48 600
48 600
Box cover DBISh 711528.003
pcs.
25 632
68 600
78 273
78 600
78 600
Box casing DBISh 731464.002
pcs.
30 328
81 168
92 613
93 000
93 000
Lighting fixture casing DBISh 731351.002
pcs.
7 827
20 947
23 900
24 000
24 000
Casing DBISh 724241.003
pcs.
7 827
20 947
23 900
24 000
24 000
Casing gYu 8.034.005
pcs.
6 653
17 805
20 315
20 400
20 400
Cover gYu 68054.004-01
pcs.
6 653
17 805
20 315
20 400
20 400
Lighting fixture casing A 190-352721
pcs.
29 937
80 121
91 418
91 800
91 800
pcs.
1 491 919
3 992 876
4 555 818
4 574 880
4 574 880
25%
57%
60%
60%
60%
Total production capacities
Capacities utilization level as of the end of the year
Dynamics of proceeds for the forecasting period
Sales proceeds ex VAT, thous. rub.
rate of increase, %
1
2
3
4
5
110 331
310 547
370 593
389 258
406 055
n/a
181,5%
19,3%
5,0%
4,3%
27
Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Financial plan
Expenditure side of the Project:
Costs for manufactured products include the following:
1. Feedstock costs (aluminum in billets Grade AK9M2 and AK12M2). Price increase for the products is included according to the official data
on the inflation in the manufacturing industry.
Sources:
- Estimation of social and economic development of the Russian Federation over the period up to 2030 (Ministry of economic development and trade of the Russian
Federation dd. 08.11.2013).
- «Scenario conditions, basic parameters of the estimation of social and economic development of the Russian Federation, and overall price levels (tariffs) for
services of companies of infrastructure sector for 2015 and for the planned period of 2016 and 2017» (Ministry of economic development and trade of the Russian
Federation dd. 20.05.2014).
2. Payroll budget of piece workers (work performed – casting work, machining, cleaning of details, removal of gates, core knockout etc.). the
number of piece workers will amount to 26 people after the revamping has been completed. The payroll budget depends on the overall
production and cost of work per 1 detail. Indexation of costs is established at the level of the official inflation in the Russian Federation.
3. Payroll budget of salary workers (economists, design engineers, process engineers, service engineers, managers, engineers etc.). Planned
number of people – 29. Average monthly salary is 28 thousand rubles with annual indexation at the inflation level.
4. Power costs: competitive advantage of the production is the application of the lowest VN tariff for manufactures. The value of 1 kV as of
2014 – 2.7 rubles.
No.
1
2
3
4
5
6
7
8
Structure of the production and sales costs in terms of principal items
Costs for feedstock and materials
Costs for power
Costs for salaries for manufacturing personnel
Uniform social tax/ Insurance contributions
Depreciation
Other costs
Selling expenses
Management expenses
Total production and sale costs
% ratio
49
8
11
4
8
18
1
1
100,0
28
Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Financial plan
Financial plan
-
thous. rub..
Basic Project indicators
1 year
2 years
3 years
4 years
5 years
Sales proceeds
110 331
310 547
370 593
389 259
Operating costs (net of depreciation)
112 016
281 483
326 890
341 177
406 055 1 586 785
354 055 1 415 621
Sales profit
-1 685
29 064
43 703
48 082
52 000
margin on sales, %
-1,53%
9,36%
11,79%
12,35%
12,81%
171 164
10,79%
depreciation
24 131
42 752
42 752
42 752
42 752
195 139
EBITDA
22 446
71 816
86 455
90 834
94 752
EBITDA margin, %
20,34%
23,13%
23,33%
23,34%
23,33%
366 303
23,08%
Accrued interest
16 784
19 471
12 402
5 565
379
54 601
Net profit
-29 127
-2 985
19 317
26 387
32 632
net profit margin,%
-22,37%
-0,81%
4,42%
5,74%
6,81%
46 224
2,91%
Investments
197 206
-
-
-
-
197 206
raised
177 485
return
Total
177 485
54 226
53 071
50 980
19 208
Company assets
315 609
273 219
241 994
215 927
229 637
Own capital
92 682
125 542
120 110
123 676
125 627
177 485
29
Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Financial plan
Basic financial and economic indicators of the Project
Indicator
Total value of the Project
197 206 thous. rub.
Amount of investments raised
177 485 thous. rub.
Own capital
19 721 thous. rub.
Investment terms
Interest rate
Project implementation period
Weighted Average Costs Of Capital (WACC)
Net present value (NPV)
-
4,5 years
12 %
5 years
16 %
29 865 thous. rub.
Internal rate of return (IRR)
23 %
Profitability Index (PI)
1,17
Pay-back period (PBP)
3,3 years
Discounted pay-back period
4,4 years
Budgetary effect 60 170 thous. rub.
 Into the RF budget 40 901 thous. rub.
 Into the RT budget 19 269 thous. rub.
Social effect – creation of 55 jobs.
30
Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Project Summary. Project SWOT analysis
Advantages
Disadvantages
 Project implementation based on the existing core business
 The enterprise has at its dispose highly qualified personnel ensuring the
development and implementation of production processes of any degree of
complexity. Critical moments of the company’s operations are the increase of
quality levels and support for product quality control. On order to manufacture
quality up to date castings, quality feedstock and related materials are used
 Increase in labor productivity, reduction of a product cost, reduction of internal
spoilage percentage, increase of production standards levels, energy saving,
mastering the production of high quality castings competitive on the market.
 Availability of sufficient number of would-be users in the Republic of Tatarstan and
of developing car cluster.
 High degree of the Project dependency on borrowed funds – 90 %
 High capital cost of the Project; long payback period typical for the
industry – 5 years
 Since the Project implementation is at the initial stage, the duration
and scope of work accepted in the Facility construction schedule
may be changed due to design modifications at the project
documentation development stage.
 High sensitivity of the Project implementation indicators to sale
price for metal.
 Foreign car manufacturers being in need for conversion to Russian components
 Highly promising trend for energy saving LED lighting fixtures popular on the
market
 Absence of sufficient amount of upgraded casting production capacities in the
Republic of Tatarstan.
 Increase of the Facility construction costs due to a long period of the
investment stage.
 Feedstock delivery failure: in such a case the enterprise has a choice
of feedstock suppliers with which the contracts for urgent feedstock
delivery have already been concluded. For this purpose, apart from
the current stock the enterprise has a reserve stock of materials
which ensures uninterrupted operations in case of the delay in
another feedstock and materials delivery.
 Change in demand: in such a case the enterprise will strengthen
marketing research in quest of new market segments.
 Appearance of additional competitors: in such a case the enterprise
will strengthen advertising activities on sales of products, thus
focusing consumers’ attention on the quality of our products and
exclusiveness thereof.
 Strong price-based competition on the part of Chinese producers.
Possibilities
Threats
31
Project Information Memorandum: the implementation of the project entitled «Modernization of casting production»
Contact information
Contacts
Akademician Rubanenko boulevard, bld. 12, entr. 2,
423808, Naberezhnye Chelny, p.o box 50
Republic of Tatarstan, Russia
.
-
Tel. : 8 (800) 100-29-12 (toll-free call all over Russia)
+7 (8552) 53-07-07 (multichannel)
Fax : +7 (8552) 53-43-20
Mobile : +7 (965) 610-47-11
Е-mail: office@magnol.ru
Website : www.magnol.ru
32