MEDIUM-TERM AND LONG-TERM DEVELOPMENT STRATEGY OF «KOKAND MECHANICAL PLANT» JOINT-STOCK COMPANY

KOKAND - 2016

2

Tableofcontents introduction…………………………………………………………………... 3

1. General characteristic of the entity of JSC «Kokand Mechanical Plant»…………………………………………….. 4

2. Environment assessment JSC «Kokand Mechanical Plant»……… 10

2.1. Analysis of external macro environment (use Model of "five forces of the competition" of M. Porter)………………………….. 10

2.2. Analysis of the internal environment….………………………….. 12

3. Strategic concept of development JSC «Kokand Mechanical Plant»……………………………………………... 14

3.1. Development is more whole also than the business strategy of the enterprise ... 14

4. Strategy development and deployment of JSC «Kokand

Mechanical Plant»……………………………………………... 18 4.1. Development of the medium-term and long-term program of

introduction of strategy …………………………………………… 18

5. Strategy of performance of tasksАО «КМЗ» на 2016-2020 ………... 19 5.1. Output and sales of production АО "КМЗ" на 2016-2020

……………………………………………………………………… 19

6. The potential existing and predicted ……………………….. 21

7. Manpower………………………………………………………... 25

8. Social security………………………………………………… 25 Conclusion………………………………………………………………….. 26

3

Introduction

In modern market conditions it is impossible to provide activities of the

entity without strategy availability. Strategy can be determined as system of

methods of activities for goal achievement of the entity. Creation of strategy

requires the careful analysis both external, and internally the environment of the

entity.

Certainly, the fact that the entity has a strategy is very important, but it is

impossible to put the end as it is necessary to find out to it, the available strategy is

how effective.

The oil and gas industry - one of dynamically developing, knowledge-

intensive, profitable and perspective industries of economy of any country of the

world. It, despite all shocks which had to be worried upon transition from planned

methods of management to market methods of regulation still has high intellectual

and economic potential. Using its potential, our country can make economic break

due to development based on this industry development of high technologies,

creations of high technology productions and the entities. But without the thought-

over strategic planning successful development of oil and gas production in the

conditions of the world competition is impossible. With respect thereto there was a

need to develop such development strategies of the entities and an industry which

shall be adapted for sharp changes in economy.

In case of real functioning of market mechanisms inevitably there is a need

of enhancement and creation of accurate system of production strategy of the

entity, accounting and cost control on production and calculations of product cost

within this or that managerial strategy.

This work is devoted to a research of theoretical and practical aspects of

production strategy of the entity, the analysis of the existing problems and the

prospects of development of a management system by production strategy,

determination of scientific assessment and representation of specific proposals on

enhancement of a management system of productive activity of the researched

4

entity, identification of allowances and increases in efficiency of use of production

resources, developments of innovative activities of JSC «Kokand Mechanical

Plant».

The purpose of this work is studying of theoretical and practical aspects of

forming of production strategy of the entity, the analysis of problems and the

prospects of management of the production strategy of JSC «Kokand Mechanical

Plant», development of practical recommendations about enhancement of

production strategy of the researched entity.

studying of theoretical aspects of production strategy of the enterprise;

consideration of functions and tasks of a management system of productive activity of

the entity;

carrying out the analysis of management of productive activity of the researched entity and assessment of its innovative

opportunities;

development of suggestions for improvement of a management system of

productive activity of JSC «Kokand Mechanical Plant»;

identification of allowances of increase in efficiency of use of production resources,

determination of the direction of innovative activities of the entity.

Tasks of this work are:

1. General characteristic of the entity of JSC «Kokand Mechanical

Plant»

«Kokand Mechanical Plant» joint-stock company (further JSC KMP) - the

leading national company which is engaged in development, production, marketing

and after-sale service (repair and upgrade), spare parts and the equipment for an

oil, gas and petrochemical industry of the country. Productions of 2015 as a

percentage and million sum. (Fig. 1 and Fig. 2.)

5

Image.1. Image.2.

Now the entity and the plants which are a part of NHC "Uzbekneftegaz" in

the activity widely use the equipment and spare parts, made in JSC KMP.

Development and production of equipment and spare parts for an oil and gas

industry of the Republic of Uzbekistan and delivery to export are key activity of

JSC KMZ. (Fig. 3.i of Fig. 4.Fig. 5.)

Fig. 1. The products shares which are a part of the entity of JSC «Uzneftegazmash» for 2015 (%)

Oil-field

equipment. 0%

Spare 4%

Non-standar

d. equipm

ent 17%

Gas cylinder

79%

Oil-field equipment.; 53,6

Spare; 2010 Non-

standard eqiupme

nt.; 8939,6

Gas cylinder

; 41689,5

JSC " Uzbekhimmash" 57%

JSC" Kokand mechanical

plant" 31%

" JSC "Bukhara mechanical-repair

plant"" 4%

JSC "Andijan SEP"6% Ltd"Urganchgazmash"

2%

6

Fig. 2. In case of revenue of a gas cylinder a share of the entity on internal the market in

%

Fig. 3.A share of the entity in the domestic market on revenue of a gas cylinder 2015. (in piece)

The mission of JSC «KMP» is ensuring effective implementation of

potential, intellectual and financial production of the national industry in the sphere

of mechanical engineering through creation, production, delivery to the market and

after-sale support of high-technology competitive products for a chemical and oil

and gas industry of the country.

Ltd"Urganchgazash"

7% " JSC "Bukhara

mechanical-repair plant"""

17%

JSC" Uzbekhimmash"

29%

JSC" Kokand MP" 47%

050000

100000150000200000250000300000350000

50693 115000

202000

321041

7

Strategic objective of JSC «KMР» - to become the large internal and

international player possessing regionally the diversified asset portfolio on all

chain of value creation actively participating in development of regions, having

high social and ecological responsibility.

Development strategy. Within creation of the integrated system of

development of long-term and mid-term plans this document is determining and in

case of problem definition of the next periods. By 2020 large-scale business

development is intended to provide the highest comprehensive income for

shareholders among the Republic of Uzbekistan joint-stock companies when

preserving the place of leaders in efficiency among NHC "Uzbekneftegaz".

The main objectives of JSC «KMР» are providing an oil and gas industry of

the country to the most modern equipment for a successful program

implementation of development of national economy, increase in a share in the

internal and external markets due to perspective developments and diversification

of the products.

JSC «KMР» provides accomplishment of a complete cycle of works, since

development, designing, serial production of aviation engineering of military and

civil appointment and finishing it with after-sale service.

Treat priority activities:

Development and serial production of the oil-field and non-standard

equipment for an oil and gas industry of the Republic of Uzbekistan, including

their upgrade and deliveries to export;

1. Development and serial production of spare parts for oil-field equipment.

2. The organization and ensuring after-sale service of the made products.

The structure of JSC «KMР» includes the producing and non-productive

manufacture workshops, and also the engineering objects (table 1) providing with

energy resources production process.

Table 1

8

Production and engineering objects JSC «КMP»

Producing department

Non-productive department

Engineering objects

Gas-balloon shop Tool shop Compressor site

Boiler and welding shop

Department of the chief mechanical engineer

Substation

Hammer shop Experienced and experimental site

Gas economy

Machine-assembly department

Department of the chief power engineer

Network of water supply

Iron foundry Transport site Boiler-house site

All producing and non-productive departments and also engineering objects

of JSC «KMР» are in technically serviceable condition and are a guarantor of

providing the planned tasks on release and implementation of products in 2016-

2020.

According to the project on reconstruction and modernization of JSC

«Kokand Mechanical Plant» in 2011-2013 also putting into operation more than 40

units high-productive, exact and the latest in technical parameters import the

equipment were purchased (Fig. 2.) Process buildings are reconstructed. It is

provided a sub time of highly qualified specialists. It is provided a sub time of

highly qualified specialists. All this allowed joint-stock company to increase

several times the potential production and increase quality of products. Through

these actions in recent years the joint-stock company mastered a number of new

non-standard boring and oil-field equipment and spare parts to them, besides a

drain tank of "E-3 EP of V=12,5 m3", reservoirs underground "V=5 m3", "V=10

m3", "V=25m3", "V=50m3", "V=200m3", "V=300m3", buffer reservoir steel

horizontal elevated "V=20 m3", technological reservoirs of different amounts are

mastered.

9

Fig. 6.Technological capabilities of JSC «KMР»

For the successful solution of accomplishment of the predicted production volume in the

planned terms, updating and upgrade of the machine park is conducted step-by-step.

Upgrade of the machine park will give the chance of cost reduction on production,

increase in output, development of new types of goods and improvement of product

quality which finally will increase product competitiveness and an exit of joint-stock

company as a producer on the foreign market.

10

Within a year of JSC «KMР» I received a positive cash inflow from the current activities,

that is from buyers and customers (fig. 7 and fig. 8).

Fig. 7.Dynamics of volume of realization of JSC «KMР» for 2011-

2015.(mln.sum)

Fig. 8.Dynamics of a net profit of JSC «KMР» for 2011-2015. (mln. sum)

2. Assessment of the environment of JSC «Kokand Mechanical Plant»

Considerable impact on JSC «KMР» is made by factors of the external

environment (macro environment) under the influence of which efficiency of

functioning of the entity and stability of its financial and economic activities can

undergo to changes. For the purpose of prevention of any negative consequences

for the specific entity, it is necessary to reveal and determine by very popular

5567,2 11490,8

27394,5

47022,2 52060,5

01000020000300004000050000600007000080000

2011 2012 2013 2014 2015

500

2000

3500

5000

6500

8000

9500

2011 2012 2013 2014 2015

604,9 699,9

6 266,4

9 040,9 9 059,9 млн. сум

11

method of researches of the events which are taking place in a macro environment

the Model of "five forces of the competition" of M. Porter is. Factors of a macro

environment exert various, changing over time impact on the strategy of business.

The analysis is designed to facilitate an impact assessment of factors of the

external environment on strategy, it draws attention to the dynamic nature of a

business environment and underlines need of periodic review of plans.

2.1. 2.1. Analysis of external macro environment of JSC «Kokand

Mechanical Plant»

Угроза вхождения в отрасль новых конкурентов.

Конкурентная сила поставщиков.

Появление на рынке товары-заменители.

Конкурентная сила потребителей.

Степень ожесточенности борьбы между существующими в отрасли конкурентами.

Анализ внешней макросреды (использованием Модель «пяти сил конкуренции» М.Портера)

Fig. 9.Model of "five forces of the competition" of M. Porter)

• 1) Threat of entry into an industry of new competitors. This threat is

extremely small for JSC «KMР» as:

• • existence in this industry requires huge capital investments (on purchase

and development of expensive new technologies, release high-quality

production);

• • there is a certain commitment of consumers to products of already

functioning companies;

• • the companies in this industry have already fixed sales channels.

2) Competitive strength of suppliers. Considerably influences financial,

productive and economic activity of JSC «KMР». Prime vendors are producers of

12

metal rolling abroad (Russian Federation). Also there is a possibility of acquisition

of raw materials and materials through trade and economic intermediaries.

3) Emergence in the market goods substitutes. Practically is absent.

Technical capabilities of JSC «KMР» allow to make the equipment and separate

nodes weighing up to 50 tons, overall dimensions up to 3200 mm and 20000 mm

long. Machining of details weighing up to 3 tons, 2000 mm high and with an outer

diameter up to 4000 mm is possible. Production of such types of products requires

highly skilled work and the most strict quality control.

4) Competitive strength of consumers. The main consumers are joint stock

companies in structure of NHС "Uzbekneftegaz" (JSC «TransGas», JSC

«Uzneftegazdobycha», the Fergana oil refinery, JSC «Uzgeoburneftegaz»). The

last years of the entity which aren't a part of NHС "Uzbekneftegaz" become

consumers of products, issued in JSC «KMР». Every year their share increases

5) Degree of bitterness of fight between the competitors existing in an

industry. JSC «AndijanSEP», JSC «NGHM Plant» and JSC «Bukharа RMZ» also

are a part of JSC «Uzneftegazmash». All these entities issue the equipment and

spare parts for an oil and gas and petrochemical complex of the country.

2.2. Analysis of the internal environment

The made analysis of the external environment allows to establish the

conditions connected with threats and opportunities of JSC «KMР».

Carrying out the analysis of the entity, in addition to the analysis of the

external environment it is necessary to estimate strong and weaknesses in the field

of his internal environment (table 2).

Table 2

Assessment strong and weaknesses in the field of the internal environment

Sphere of activity Strengths Weaknesses

Production 1. High level of quality of production.

2. Considerable depreciation of the equipment.

13

Technology

1. Availability of high technology at the level of the

KNOW-HOW; 2. Experienced staff of

technological service of the entity;

3. Opportunities in the field of extension of listed products.

1. Shortage of a free money for sale of new types of

products.

1. The settled highly skilled

group of workers; 2. Low turn over of staff.

Personnel

1. Years the fulfilled controlling mechanism a personnel;

2. Effective distribution of job responsibilities between heads; 3. Efficiency and use of control.

1. The entity has regular customers;

2. Inefficiency of interaction of various divisions in the

course of goal achievement of the organization.

Organization

1. High reputation of the entity in the field of high-quality

products; 2. Low price in comparison with

competitors;

1. Low gaining of new clients; 2. Low promotion of goods on

the market; 3. Shortage of advertising of

the organization; 4. Undeveloped price policy

Marketing

1. Financial independence of the creditors granting an interest

credit; 2. A possibility of the

differentiated trade through corporate retail network.

1. Critical shortage of own current assets;

2. Low rates of assets conversion cycle;

3. Sharp growth of debt of debtors.

On the basis of the conducted research on a macro environment and

identification strong and weaknesses in the internal environment of the entity, it is

possible to create SWOT — a matrix.

14

SWOT-the matrix reflects opportunities and threats of JSC «KMР» in case

of an integrated approach to early to the described negatives and positives (table

3).

Table 3

SWOT matrix on JSC «КМP»

OPPORTUNITIES STRENGTHS

1. A capability to serve additional clients and to enter the new markets; 2. A way of expansion of the range to satisfy more need of clients; 3. Vertical integration; 4. Weakening of the position of firms of competitors; 5. Use of all benefits of a provision of firm.

1. Technological capabilities of the entity; 2. High quality level of products; 3. Highly skilled personnel; 4. The experience and skills which are available for workers; 5. Good reputation at buyers about firm; 6. Ability to avoid (at least to a certain extent) strong pressure from competitors; 7. The checked management; 8. Low staff turnover; 9. Years the fulfilled controlling mechanism a personnel; 10. Efficiency of control; 11. Low price in comparison with competitors.

THREATS WEAKNESSES

1. High tax claims; 2. Slow growth of the market; 3. The growing insistence at buyers and suppliers; 4. Change of requirements.

1. Actual lack of own current assets; 2. Insufficient image; 3. Low marketing researches; 4. Low profitability because of a lack of management of talent and ability; 5. Narrow range of products; 6. Badly developed sales network; 7. Lack of money for financing of necessary changes in strategy; 8. Weak idea of the market.

3. Strategic concept of development of the entity

3.1. Development is more whole also than the business strategy of the

entity

15

Main objectives and tasks of society:

Main goal – forming and stable development cost-efficient and high-

technology the producer of high level.

Short-term objectives (2016): preserving and development of the scientific

and technical and potential production which is saved up by developers and the

serial plants for effective implementation of the signed contracts.

Medium-term purposes (2016-2017): deduction of competitive line items in

the market due to creation and implementation of new types of products,

development of new types of after-sale services.

Long-term goals (2018-2020): entry into the new markets (including on

world) for the realization account of development programs of the entity.

1. Main objectives and tasks of society:

2. Main goal – forming and stable development cost-efficient and high-

technology the producer of high level.

3. Short-term objectives (2016): preserving and development of the scientific

and technical and potential production which is saved up by developers and the

serial plants for effective implementation of the signed contracts.

4. Medium-term purposes (2016-2017): deduction of competitive line items in

the market due to creation and implementation of new types of products,

development of new types of after-sale services.

5. Long-term goals (2018-2020): entry into the new markets (including on

world) for the realization account of development programs of the entity.

6. Expansion of the market and services, increase in product competitiveness

and services, and also increase in efficiency of a marketing activity. For goal

achievement of expansion of the market it is necessary to issue new types of the

oil-field equipment (The line of slaughter of the large-size cattle, biogas

installation).

7. Ensuring transfer of production processes of products to world level due to

use of new technologies and materials, and also creations of the mechanism of

production cooperation through the integrated management of national and

16

international suppliers (the entities, as a part of NHC "Uzbekneftegaz" and the

stand-alone organizations).

8. 8. Creation of effective high technology production based on technical

retrofitting of the entities, and also creations of an effective quality management

system.

Fig. 10. The products shares which are a part of the entity of JSC Uzneftegazmash for 2015

(%)

20122013

20142015

11 490 83527 394 487

47 022 224 52 060 518

Increase in production after modernization (Thousands of sum)

Fig. 11.

Increase in production after upgrade of 2012 - 2015 (Thousand sum)

The main consumers of products of JSC « Kokand Mechanical Plant are»: I.JSC «Uztransgaz»

а) UE «Vodiygaztaminot»

JSC " Uzbekhimmash";

57,1

JSC" Kokand MP"; 30,6

JSC "Bukhara MRP"; 4,2

JSC" Andijan SEP"; 6

Ldt" Urgenchmash";

2,1

17

б) UE «Markazgaztaminot»

II.JSC «Uzgeoburneft»

а) JSC «Buxaraneftgazparmalash»

б) JSC «Kashkadaryoparmalash»

в) JSC «Minoraqurulishekspeditsiyasi»

г) «Каsан НГРЭ»

д) «Оlот НГРЭ»

III.JSCUzneftgazdobicha»

а) UDP «Muborakneftgaz»

б) UDP «Shurtanneftegaz»

в) GPZ «Mubarakneft»

IV.JSC «Uzneftegazmahsulot»

а) JSC «Fergana NPZ»

V. The consumers who aren't entering internal system.

а) LTD «Samavto» и «МАN»

б) JSC «Kukonspirt»

в) JSC «Kukonyog-moy» and other enterprises.

On delivery of products in 2016 65 contracts for the amount - 58,0 billion bags are signed Including:

With the entities of NHC "Uzbekneftegaz" of 14 contracts for the amount – 54,5 billion sum

The Other organizations of 53 contracts for the amount – 3,5 billion sum

The signed delivery agreements of products on the joint-stock company "The Kokand mechanical plant for 2016.

Fig. 12. The signed delivery agreements of products on the joint-stock company “The Kokand mechanical plant» for 2016.

18

4. Development and deployment of strategy in JSC Kokand Mechanical

Plant

4.1 Development of the medium-term and long-term program of

implementation of strategy

For JSC «KMР» growth strategy on the basis of large-scale diversification

of production, consolidation and expansion of the line items in the domestic market

was chosen. This strategy completely answers a mission, the purpose and values of

JSC «KMР»

Table 4

The program of realization of the chosen strategy in JSC «KMР»

Actions Contractor Purposes Sources

financings Terms

performance

Upgrade of production capacities of Society,

complex modernization.

Department of the chief technologist and

designer, chief engineer, chiefs of

manufacture and non-productive departments

To increase sales volume

Optimization of production, engineering

and management processes

Department of the chief technologist and

designer, chief engineer, chiefs of

manufacture and non-productive

departments, department of

economy and strategic planning

Own enterprise

assets

The organization of effective system of after-

sale service of earlier delivered products;

Service of marketing and logistics, chief engineer, chiefs of

shops

To create favorable

conditions for release of high-quality products

Own enterprise assets

The organization of the international cooperation

for the purpose of creation of the modern equipment

for an oil and gas industry.

Service of marketing and logistics,

Department of export, external purchases and on work with foreign

clients

Creation of favorable image

of the entity

Own enterprise assets

19

Creation and promotion on the export markets

Department of export, external purchases and of work with foreign

clients

Expansion of the market to

interest business partners

Own enterprise assets

Involvement of foreign investors

Department of attraction of

investment and implementation of investment projects

Expansion of the market

Own enterprise assets

5. The strategy of task performance of JSC «KMР» for 2016-2020.

Following section developed analyses of the last 5 years of activities of joint-stock company.

The main strategy of society is support of high security of production by qualified specialists,

the high level of a technical and technological condition, intensive updating of the park of

equipment, expansions of production capacities and creation of new workplaces which

finally are a guarantor of employment of the population and especially youth.

5.1. Production volume and sales of production of JSC «KMР» for 2016-2020.

The production schedule of JSC «KMР» for 2016-2020. Table 5

№ Types of the made production unit 2016 2017 2018 2019 2 020

1 Other non-standard equipment

th. sum 47 392 654 49 180 396 51 179 990 53 180 367 54 180 163

1.1 Including household gas cylinder V=50l

th. sum 40 080 000 30 000 000 22 000 000 14 000 000 6 000 000

2 Spare parts to drilling equipment

th. sum 6 911 002 7 049 222 7 049 665 7 049 665 7 049 665

3 Oil-fieldequipment th.

sum 3 696 553 3 770 484 3 770 484 3 770 484 3 770 484

Total th. sum 58 000 209 60 000 103 62 000 139 64 000 516 65 000 312

20

Fig.13.

Rate of production volume and sales of products of JSC «KMР» for 2016-2020 (one

millionsum) of Fig. 14

6. The potential existing and predicted

On the basis of analysis results of indicators for 2010-2015 such parameters as real requirement raw, material and the manpower necessary for ensuring release of the planned products amount for 2016-2020 are determined.

47 392 654

49 180 396

51 179 990

53 180 367

54 180 163

6 911 002

7 049 222

7 049 665

7 049 665

7 049 665

3 696 553

3 770 484

3 770 484

3 770 484

3 770 484

0 10 000 000 20 000 000 30 000 000 40 000 000 50 000 000 60 000 000

2 016

2 017

2 018

2 019

2 020 Нефтепромысловое оборудование

Запасные части к буровому оборудованию

Прочие нестандартные оборудования

58 000,21 60 000,10

62 000,14

64 000,52 65 000,31

54 000,00

56 000,00

58 000,00

60 000,00

62 000,00

64 000,00

66 000,00

2016 2017 2018 2019 2020

Spare parts to drilling equipment

Other non-standard equipment

Oil-fieldequipm

ent

21

6.1. The forecast of the main technical and economic indicators of JSC Kokand Mechanical Plant for 2016-2020.

Table6(th.sум) Expected Profit and loss report Ед. 2016 2017 2018 2019 2020

Salesproceeds т. с. 58 000 209 60 000 103 62 000 139 64 000 516 65 000 312 Costofsales т. с. 44 601 516 46 141 437 47 785 410 49 415 369 50 250 648 Grossprofit т. с. 13 398 693 13 858 666 14 214 729 14 585 147 14 749 663 Periodexpenses 6 790 205 7 022 845 7 254 566 7 487 381 7 603 362 Sellingexpenses т. с. 519 693 551 939 591 786 639 481 689 848 Administrativeexpenses т. с. 2 894 365 3 073 956 3 295 883 3 561 511 3 842 023 Otheroperatingexpenses т. с. 5 696 665 6 050 134 6 486 929 7 009 737 7 561 838 Other income from primary activity т. с. 2 139 931 2 139 931 2 139 931 2 139 931 2 139 931

Profit (loss) from primary activity т. с. 8 748 419 8 975 751 9 100 094 9 237 697 9 286 232

Incomefromfinancialactivities т. с. 210 000 226 800 244 944 264 540 285 703 Expensesonfinancialactivities т. с. 226 150 244 242 263 781 284 884 288 900

Profittothetaxation т. с. 8 732 269 8 958 309 9 081 257 9 217 352 9 283 035

Incometax т. с. 654 920 671 873 681 094 691 301 696 228 Othertaxes 646 188 662 915 672 013 682 084 686 945

Netprofit (loss) т. с. 7 431 161 7 623 521 7 728 149 7 843 967 7 899 862 Costreduction т. с. 2 586 000 2 686 000 2 786 000 2 886 000 2 986 000 Net profit taking into account decrease in expenses т. с. 10 017 161 10 309 521 10 514 149 10 729 967 10 885 862

6.2 Dynamics of increase a net profit of JSC «KMР» for 2016-2020 (million sum) of Fig.

15.

9 4009 6009 800

10 00010 20010 40010 60010 80011 000

2016 2017 2018 2019 2020

10 017

10 310 10 514

10 730 10 886

22

6.3 The analysis of indicators of profitability of JSC «KMР» for 2016 - 2020 (%)

Fig.16.

Economic development of everyone the entity in many respects depends on indicators of

effective work. The main characteristic of success of any entity is its stability. The main goal

of society JSC «KMР» is stability in all indicators and to hold such level.

0%

5%

10%

15%

20%

25%

30%

35%

2016 2017 2018 2019 2020

Маржа чистой прибыли Рентабельность продаж (маржа EBIT) Маржа EBITDA

Dynamics of indicators of profitability

23

6.4. Structure and cost structure (%) of Fig. 17.

6.4. Revenue and breakeven points of production of JSC «KMР» (million sum)

Fig.18.

7,57% 7,53% 7,50% 7,45% 7,38%

2,06% 2,04% 2,03% 2,02% 1,99%

50,91% 50,73% 50,48% 50,15% 49,62%

22,50% 22,37% 22,15% 21,89% 21,61%

0,97% 0,99% 1,02% 1,05% 1,11%

5,39% 5,51% 5,67% 5,87% 6,16%

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

30,00%

35,00%

40,00%

45,00%

50,00%

55,00%

2016 2017 2018 2019 2020

Расходы на заработную плату

Затраты по ЕСП

Материальные расходы

Накладные расходы

Расходы по реализации

Административные расходы

Прочие операционные расходы

58 000 60 000 62 000 64 000 65 000

42 960 44 430 46 073 47 692 48 540

3500000040000000450000005000000055000000600000006500000070000000

2016 2017 2018 2019 2020

Выручка Точка безубыточности

expenditure on salaries

expenditure for single social tax

expenditure for material

overhead expenses

expenditure for distribution

Expenditure for administrative

Expenditure for other operations

Breakeven points revenu

24

6.5. The analysis and assessment of a financial position of JSC «КМP» за 2016-

2020.Table7

Analysis of indicators of liquidity Un. 2016 2017 2018 2019 2020 Coefficient of the general liquidity (covering coefficient) Currentassets th.s. 16 070 939 17 208 972 18 550 257 21 218 089 21 752 778

Currentliabilities th.s. 4 232 900 4 018 245 3 818 691 3 632 763 3 459 161

Coefficient of the general liquidity - 4,03 4,56 5,34 6,06 Coefficientofurgentliquidity

Currentassets th.s. 16 070 939 17 208 972 18 550 257 21 218 089 21 752 778

Tradeinventory th.s. 9 900 389 10 779 217 11 819 485 14 147 782 14 295 219

Currentliabilities th.s. 4 232 900 4 018 245 3 818 691 3 632 763 3 459 161

Coefficientofurgentliquidity - 1,53 1,68 1,85 2,05 Absoluteliquidityindex

Moneyresource th.s. 360 550 445 455 566 943 721 563 918 353

Currentliabilities th.s. 4 232 900 4 018 245 3 818 691 3 632 763 3 459 161

Absoluteliquidityindex - 0,10 0,13 0,17 0,23 Coefficient of security of sales with working capital

Accountspayable th.s. 578 880 503 626 438 154 381 194 331 639

Tradeinventory th.s. 9 900 389 10 779 217 11 819 485 14 147 782 14 295 219

Accountsreceivable th.s. 5 810 000 5 984 300 6 163 829 6 348 744 6 539 206

Needforworkingcapital th.s. 4669269 5298543 6093811 8180233 8087651

Average need for working capital th.s. - 4983906 5696177 7137022 8133942

Receipts th.s. 58 000 209 60 000 103 62 000 139 64 000 516 65 000 312

Coefficient of an obesepechennost of sales by working capital - 0,08 0,09 0,11 0,13

Coefficient of the period of security with liquid assets

Currentassets th.s. 16 070 939 17 208 972 18 550 257 21 218 089 21 752 778

Tradeinventory th.s. 9 900 389 10 779 217 11 819 485 14 147 782 14 295 219

Dailyaverageoperatingexpenses th.s. 113554,8 118411,1 123550,0 128653,5 131259,7

Coefficient of security with liquid assets day 54,34 54,30 54,48 54,96 56,82

Networkingcapital

Currentassets (CA) th.s.

16 070 939 17 208 972 18 550 257 21 218 089 21 752 778

Currentliabilities (CL) th.s.

4 232 900 4 018 245 3 818 691 3 632 763 3 459 161

Networkingcapital (NWC) th.s.

11838039 13190727 14731567 17585326 18293617

25

6.6. Dynamics of coefficients of liquidity of JSC «KMР» of 2017-2020.(%) Fig.19

6.7. Influence of various risks on profit size to the taxation of JSC «KMР» for 2016 -

2020.Table 8

Perio

ds (k

v) Profit size

to the taxation without

influence of risks

Profit to the taxation in

case of decrease in production volume by 2,5% a year

Diffe

renc

e

Profit to the taxation in

case of increase in

material costs by 2,5% a year

Diffe

renc

e Profit to the taxation in

case of increase in

CNE by 2,5% a year

Diffe

renc

e

Profit to the

taxation in case of

increase in expenses

of the period of

2,5% a year

Diffe

renc

e

1 1 120 201 1 105 364 -14 838 1 007 562 -112 639 1 059 590 -60 611 1 063 695 -56 507 2 1 500 983 1 476 679 -24 304 1 352 373 -148 610 1 417 553 -83 430 1 444 229 -56 754 3 1 507 987 1 483 561 -24 426 1 358 555 -149 432 1 424 100 -83 886 1 450 927 -57 060 4 1 522 372 1 497 746 -24 626 1 372 004 -150 369 1 437 940 -84 432 1 464 924 -57 448 5 1 712 764 1 687 357 -25 407 1 555 072 -157 692 1 624 451 -88 313 1 652 881 -59 883 6 1 722 994 1 697 402 -25 593 1 564 296 -158 698 1 634 123 -88 871 1 662 739 -60 256 7 1 732 322 1 706 566 -25 756 1 572 625 -159 697 1 642 898 -89 424 1 671 698 -60 624 8 1 752 040 1 726 001 -26 038 1 591 051 -160 988 1 661 876 -90 163 1 690 902 -61 138 9 2 000 479 1 973 486 -26 994 1 831 260 -169 219 1 905 920 -94 560 1 936 575 -63 904

10 2 016 544 1 989 241 -27 303 1 845 613 -170 931 1 921 037 -95 506 1 952 017 -64 527 11 2 028 746 2 001 231 -27 515 1 856 618 -172 128 1 932 566 -96 180 1 963 774 -64 972 12 2 056 403 2 028 475 -27 928 1 881 617 -174 786 1 958 741 -97 662 1 990 441 -65 962 13 2 372 792 2 343 895 -28 896 2 189 272 -183 519 2 270 462 -102 330 2 303 890 -68 902 14 2 387 360 2 358 222 -29 138 2 202 323 -185 037 2 284 195 -103 165 2 317 908 -69 452 15 2 408 936 2 379 381 -29 555 2 220 655 -188 281 2 303 989 -104 947 2 338 327 -70 609 16 2 436 496 2 406 620 -29 876 2 246 406 -190 090 2 330 523 -105 973 2 365 190 -71 306 17 2 844 651 2 813 739 -30 912 2 644 816 -199 834 2 733 465 -111 186 2 770 056 -74 594 18 2 859 174 2 828 062 -31 113 2 657 652 -201 523 2 747 053 -112 121 2 783 968 -75 206 19 2 877 477 2 846 069 -31 408 2 674 400 -203 077 2 764 485 -112 992 2 801 698 -75 779 20 2 910 038 2 878 302 -31 736 2 704 318 -205 719 2 795 570 -114 467 2 833 275 -76 763

Tot

al

41 77

0 758

41 22

7 397

-543

361

38 32

8 490

-3 44

2 268

39 85

0 538

-1 92

0 220

40 45

9 113

-1 31

1 645

4,03 4,56

5,34

1,53 1,68 1,85 2,05

0,10 0,13 0,17 0,23 0123456

2017 2018 2019 2020

Coefficient of the general liquidity

Absolute liquidity index

Dynamics of coefficients of liquidity

Coefficient of urgent liquidity

26

7. Manpower

Requirement and availability of a manpower

Due to the reconstruction and modernization of the plant preparation and retraining of

personnel for work on the modern equipment taking into account their specification is of

particular importance.

At the entity the following types of professional training are applied:

- training of new workers;

- retraining and training of workers in the second (adjacent) professions;

- advanced training.

Advanced training is planned on the following forms of education:

- technological rates;

- purpose rates.

Leading employees and specialists of the plant improve the skills in the highest business to

school in case of Academy of the President of the Republic of Uzbekistan both other higher

educational institutions and special rates on advanced training on the basis of the signed

agreements.

8. Social security

Questions of social development, including improvement of working conditions, life and

health, guarantees of compulsory medical insurance of members of labor collective, are

permitted by labor collective and administration of JSC «Kokand Mechanical Plant»

according to the legislation of the Republic of Uzbekistan.

9. Conclusion Accomplishment of all undertaken obligations of the Business plan for 2016-2020

will allow:

1. To increase production capacities, to increase amount of release and

implementation of products;

2. To provide accomplishment of the accepted tasks on production of import-

substituting products;

3. To keep a strong financial position of the entity;

27

4. To provide social protection of workers;

To keep qualified personnel.

Above the carried-out analysis showed that the strategic concept of

development of JSC «KMР» represents growth strategy on the basis of large-scale

diversification of production, consolidation and expansion of the line items on

internal and external the markets.

This Strategy assumes forecasting of future provision of JSC «KMР»,

calculation of resources and dynamics of their change taking into account a

possibility of counteraction and unforeseen accidents.

It determines the direction of development, both on internal, and by external

characteristics of JSC «KMР», i.e. taking into account its external and internal

factors of development.

High professionalism of managing directors and personnel of JSC «KMР»

allows the company to reach rather high level of development and to adhere to the

strategy of innovative development, to be competitive in an industry.

For preserving and further strengthening of line items in the future the

growth in volumes of production and sale of the products due to extension of the

assortment list of new types of products the Line of slaughter of the large-size

cattle, biogas installation), being in the increased demand, creations of new

products in the sphere of the core business, and also an exit to the new markets

shall remain the main strategic direction of JSC «KMР».

Implementation of growth strategy on the basis of large-scale

diversification of productionwill give the chance of JSC «KMР» on the one hand

to lower such indicators of control as cost value, costs in work in progress, terms of

performance of works, business expenses, production preparation time, and on the

other hand to increase revenue, sales volume, creation of workplaces due to

involvement of highly qualified specialists. At the same time, such indicators of

control as costs for raw materials, materials, accessories and the equipment will

increase that will lead to expenses on the electric power and capital investments in

a construction.

28

Chairman of the board of theJSC “КМP” SH. Yuldashev

Director of production, perspective

development and investments Z.T.Parpiev

Directormarketing and finance A.A.Fazilov

Head of department of economy

and strategic planning R.S.Usmanov

Contractors:

Usmonov R.S

Khafizov N.

Mirhkahmedov.M