Pilot Privatization Program In Belarus

PILOT PRIVATIZATION PROGRAM IN

THE REPUBLIC OF BELARUS

This project is supported by a Trust Fund established by the Ministry of Finance of Austria under the supervision of the World Bank

Background of the pilot project

• The government of Belarus has in recent years embarked on a gradual reform process aimed at fostering domestic and foreign private sector initiatives. Within the framework of a broader strategy aimed at attracting foreign investment in support of the economic modernization, a “case-by-case” privatization program is expected to target international strategic investors. The program is supported by a new Privatization Law issued on July 26, 2010, respective by laws and the new privatization Agency (NAIP) which was established on May 25, 2011 as a state institution subordinated to the Ministry of Economy of the Republic of Belarus. NAIP collaborates with the State Property Committee which manages government owned assets.

• The Ministry of Finance of Austria established a Trust Fund in November 2010 in the amount of US$5 million to support the Belarus privatization program for duration of up to five years. The Project will be executed under the administration and supervision of the World Bank. The objective of the Project is to implement a small scale case-by-case privatization program in accordance with international best practices in order to attract strategic investors.

• Eight medium sized SOEs for pilot cases have been identified for the Project and assigned to NAIP to privatize.

•Open Joint-Stock Company “Baranovichi Reinforced Concrete Products Plant” (Short name: OJSC “Baranovichi KZBK”)

•Web-site: www. zhelezobeton.by

NAME OF THE COMPANY

•Production of reinforced concrete and concrete constructions and products (96% of sales)MAIN ACTIVITY

•Production of wall blocks; ready-mixed concrete; construction metal products, plaster and cement;

•Blacksmithing, pressing, stamping, profiling, metal powder OTHER ACTIVITIES

•640 employeesPERSONNEL

100%

Private owners 0.975%

State

99.025%

INDICATORSYEAR

2009 2010 9M 2011Value of net assets, BYR mn 18,756 21,829 22,987Sales proceeds (products, work, services), BYR mn 62,719 84,291 92,652Profit from sales of goods, work, services, BYR mn 2 ,26 4,008 2,666Net profit, BYR mn 979 1,450 1,302Profitability of sold products, work, services, % 4.1 5.9 3.3Debtors’ products, BYR mn 1,724 3,228 9,848Accounts receivable, BYR mn 5,616 10,839 29,407Average wage, BYR thsd 1,263.8 1,666.6 2,053.3

(6M 2011)

BARANOVICHI REINFORCED CONCRETE PRODUCTS PLANT

Ownership structure

Financials

General informationGeneral information

Location

Baranovichi

Address: Bersona str. 14, 220050, Minsk, Republic of BelarusTel. +375 17 222 68 41, GSM: +375 29 996 06 [email protected]

BARANOVICHI REINFORCED CONCRETE PRODUCTS PLANT

PRODUCTS, WORK,

SERVICESOUTPUT

YEAR

2008 2009 2010 6M 2011

Precast reinforced concrete constructions

cu m 146 400

152 200 168 70088 922

Bed plates thsd units 657 250 323 145Ready-mixed concrete cu m 9 592 14 784 12 680 6 235Building mortar cu m 888 1 037 782 366Commercial reinforced steel t 18 12 16 4Industrial work and services t 16 12 10

Production

KEY ADVANTAGES

Proximity to international markets such as Poland and Ukraine

Access to various modes of transportation including railways and highway E35 which leads to Moscow and Warsaw

45 years experience

Raw materials purchased directly from Belarusian suppliers

Superior marketing expertise

Strengths of the Company

Sales

2009 2010 6 months of 2011

0

20

40

60

80

100

80.2 73.4 72.8

19.8 26.6 27.2

Structure of sales, %

Domestic market External market

The main foreign customer is Russia. Besides Russia the company is actively increasing its exports to Lithuania, Latvia, China and other countries.

The Company`s activities are certified for compliance with:ISO 9001-2009 ISO 18001-2009

mailto:[email protected]

BELSANTEKHMONTAZH-2

Ownership structure

General information

Location

Financials

•Open Joint-Stock Company “Belsantekhmontazh-2 ” (Short name: OJSC “Belsantekhmontazh-2 ”)

•Web-site:www.bstm2.byNAME OF THE COMPANY

•Installation, sanitary engineering and ventilation works at the facilities of the industrial, residential, social infrastructure, healthcare and other sectors.

MAIN ACTIVITY

•Manufacture of gate valves, pipe and ventilation, pre-insulated pipes for heat pipelines;

•Production of pipeline fixtures, inflow chambers of flexible air ducts, plastic siphons, filters, adjustable and fixed bar grilles and many other metal structures

OTHER ACTIVITIES


100%


State

76.95%Minsk

Grodno

Borisov

Brest Pinsk

Baranovichi

Lida

Soligorsk

INDICATOR 2009 2010 9M 2011Net assets value, BYR mn 39,481 51,450 57,369Revenue from sales of goods, works, services, BYR mn 190,317 246,606 239,606Goods, works, services sales profit, BYR mn 11,126 16,475 12,284Net profit, BYR mn 8,234 12,315 8,699

Goods, works, services sales margins, % 5.8 6.7 4.1

Receivables, BYR mn 21,482 30,570 50,590

Payables, BYR mn 25,498 38,493 50,469

Average wage, BYR mn 1,411 1,761 2,218 (6M 2011)

Production


Sales

BELSANTEKHMONTAZH-2

The Company`s activities are certified for compliance with:ISO 9001-2001


Goods, works, services Output Year

2009 2010 6M 2011Construction BYR mn 136,926 163,091 96,063

Production BYR mn 25,440 33,726 19,958

Minsk-arena

National Library

Hotel “Europe 5*

Minsk Railway Station

KEY ADVANTAGES

Broad experience (among the completed projects are the Minsk Automobile/Tractor/Engine Plants, Grodno Association Azot, Soligorsk Potash Integrated Plant, Yubileinaya, Planeta, Belarus and Europe Hotels, Palace of the Republic, National Library, Minsk Subway)

Solid cooperation with foreign companies

Construction works held abroad

Main customers include:

Construction companies Contracting organizations Wholesale and retail companies Industrial enterprises

2009 2010 6 months 2011

0

20

40

60

80

100

99.3 99.3 100

0.700000000000001

0.700000000000001

Sales structure, %

Local market External market


AVTOMAGISTRAL

Ownership structure

Financials

General information

Location

•Open Joint-Stock Company “Avtomagistral” (Short name: OJSC “Avtomagistral”)

•Address: 8 Kizhevatova St., 220099, MinskNAME OF THE COMPANY

•Construction of roads, airfields and sports facilities (40.8% of the total revenues for 2010). MAIN ACTIVITY

•Sale of asphalt, bitumen emulsion, provision of road transport services, leasing of facilities, machinery, and equipment.

OTHER ACTIVITIES


100%


State

98.11% Minsk

INDICATORSYEAR

2009 2010 9M 2011

Net assets value, BYR mn 63,990 70,723 72,183

Revenues from sales of products/work/services, BYR mn 56,315 70,853 67,812

Profit from sales of products/work/services, BYR mn 2,735 3,563 2,825

Net profit, BYR mn 513 682 856

Sales margins, % 6.1 6.4 4.9

Accounts receivable, BYR mn 5,257 5,200 10,546

Accounts payable, BYR mn 7,673 7,550 13,489

Average wages, BYR mn 1,041.2 1,176.51,392

(6M 2011)


Production


Sales

AVTOMAGISTRAL

PRODUCTS, WORK, SERVICES OUTPUTYEAR

2009 2010 6M 2011

Volume of contract repair and construction

work performed by the company’s staff,

including:

BYR mn 51,516 61,388 27,362

- construction BYR mn 14,485 13,524 3,909- major repairs BYR mn 13,289 14,638 8,702- ordinary repairs BYR mn 9,423 19,251 3,639- maintenance BYR mn 12,668 13,179 10,879- production facilities repairs BYR mn 1,651 796 233

KEY ADVANTAGES

execution of contract work by mobile units

extensive network of technological bases of branches located in regions that have asphalt plants, lines of gravel enhancement and washing, storage tanks for binding substances enable the Company to carry out mobile road work throughout the country

production of the most popular road building materials on their own (cationic bitumen emulsions, asphalt concrete mixtures)

The Company`s activities are certified for compliance with:ISO 9001-2009 ISO 14001-2005 ISO 18001-2005

2009 2010 6 months of 2011

0

20

40

60

80

100

100 99.7 100

Sales structure, %

Domestic market Foreign market

Main customers for the company`s services and products are Belarusian enterprises. Thin coating of roads with hot asphalt mixtures is the most sustainable type of work in the market. The main customers for cationic bitumen emulsion are enterprises of Minsk and Grodno Oblasts.


•Open Joint-Stock Company “Construction and Mounting Trust No. 8” (Short name: OJSC “CMT No. 8”)

•Address: 37 Kalvariyskaya str., 220073 Minsk

NAME OF THE COMPANY

•Construction of roads, airfields and sports facilities MAIN ACTIVITY

•Production of lumber, steel, asphalt concrete, mortar and concrete.OTHER ACTIVITIES


CONSTRUCTION AND MOUNTING TRUST №8

Ownership structure

Financials

General informationGeneral information

Location

100%


State

99.79% Minsk

IndicatorsYear

2009 2010 9M 2011


Revenues from sales of products/work/services, BYR

mn

79,695 81,915 108,719

Profit from sales of products/work/services, BYR mn 383 1,716 3,430

Net profit, BYR mn 141 617 1,251




Average wages, BYR mn 1,368.8 1,548.6 1,921.1(6M 2011)

Production

KEY ADVANTAGES

Relatively high productivity compared to its main competitors (CMT №1, CMT №4, CMT №5, CMT №6)

20 years experience


Sales

The Company`s activities are certified for compliance with:STB ISO 9001-2001 STB ISO 14001-2005 STB ISO 18001-2005

CONSTRUCTION AND MOUNTING TRUST №8

PRODUCTS, WORK, SERVICES, BYR mnYEAR

2009 2010 6M 20111. Public roads 35,852.5 53,408.9 52,916.1

Construction 32,771.1 49,690.2 47,453.7 Major repairs 454.5 2,201.3 1.4 Ordinary repairs 2,626.8 1,517.4 5,461

2. Other customers 32,997.4 21,933.2 11,186.2Construction 14,348.3 15,843.2 3,785.1

Major repairs 18,183.3 3,391.0 7,401.1Ordinary repairs 465.8 2,699.0

3. Total 68,849.9 75,342.1 64,102.3

Over the recent years the company has carried out its activities on the domestic market only. Main markets include predominantly Minsk City, Minsk Oblast, Mogilev Oblast, and Vitebsk Oblast. For 20 years of its operations, the Company has built over 830 km of public roads, including of national importance. It has built 224 thousand square meters of housing, as well as a number of sites for industrial purposes.

STRUCTURE (%) 2009 2010 6M 2011Domestic market 100 100 100Foreign market n/a n/a n/aTotal 100 100 100

BELGAZSTROY

Ownership structure

General information

Location

•Open Joint-Stock Company “Belgazstroy” (Short name: OJSC “Belgazstroy”)

•Address: 4 Sovetskaya str., MinskNAME OF THE COMPANY

•main contract activity and construction of gas pipelines, provision of gas supply, installation of engineering networks and structures, construction of heat pipelines from pre-insulated pipes, polymer pipe insulation for gas pipelines and pre-insulation for heat pipelines

MAIN ACTIVITY

•manufacture of units, parts and metal structures, welded joints quality control, tank diagnosticsOTHER ACTIVITIES


Financials

100%


State

50.6%

MinskStolbtsy

Vitebsk

Borisov

Polotsk

Osipovichi

Bobruisk

INDICATORSYEAR

2009 2010 9M 2011

Net asset value, BYR bn 24,851 30,362 34,008Revenue from sales of goods, works, services, BYR bn 67,682 52,992 85,285

Goods, works, services sales profit, BYR bn 4,270 5,268 6,494Net profit, BYR bn 2,515 3,244 5,241Goods, works, services sales margins 7.98 7.78 7.61Receivables, BYR bn 8,631 9,811 21,147Payables, BYR bn 11,094 15,336 24,668Average wage, BYR,’000 2,272 3,944 1,859 (6M 2011)

Production


Sales

BELGAZSTROY


PRODUCTS, WORK, SERVICES OUTPUTYEAR

2009 2010 6M 20111. Welded joints quality control BYR, bn 0.256 0.351 0.1452. Main contract activity BYR, bn 0.714 0.497 0.7793. Provision of advisory and consultancy services for PDVSA GAS in construction of gas pipeline networks and structures in Barinos

BYR, bn 1.284 4.146 2.689

4. Goods sale BYR, bn n/d n/d 0.376

KEY ADVANTAGES

a strong position in the local market

demand for the company`s products abroad

a strategic partner - PDVSA GAS

long-term contracts for products supply

Main sales markets: Republic of BelarusMain competitors at the internal market: SPA Beltopgaz At the external market, in 2008 Belgazstroi OJSC concluded a contract with PDVSA GAS for providing advisory and consultancy services in the sphere of construction of gas pipeline networks and structures in Barinos (Bolivarian Republic of Venezuela).

2009 2010 6 months 20110%

20%

40%

60%

80%

100%

4317

33

5783

67

Sales structure, %


MEDPLAST

Ownership structure

General information

Location

Ownership structure

•Open Joint-Stock Company “Medplast” (Short name: OJSC “Medplast”)

•Web-site: www.medplast.byNAME OF THE COMPANY

•Production of the single-use syringeMAIN ACTIVITY

•Manufacturing of goods used in constructionOTHER ACTIVITY


100%

Private owners 0.1%

State

99.9%

Gomel

INDICATORS YEAR

2009 2010 9M 2011


Revenues from sales of products/work/services, BYR

mn

19,712 23,804 29,192


Net profit, BYR mn 1,968 1,685 3,500




Average wages, BYR mn 990.1 1,300.6 1,664.6 (6M 2011)

Production


Sales

MEDPLAST


PRODUCTSOUTPUT (BYR mn)

2009 2010 6M 2011

Single-use injection syringes 16,412 (119 mn pieces)

21,937 (135 mn pieces)

19,833 (84 mn pieces)

Other plastic products 152 214 230Output, total 16,564 22,151 20,063

KEY ADVANTAGES

Advantageous location – proximity to Russia and Ukraine

Leading position at the market (about 80% in 2010)

The main market for export sales is Russia. The major strategic partners on this market are the companies ‘NikKomed’Ltd. and ‘Camelia’Ltd.

Currently the company is partnering with ‘BogMark Ukraine’ Ltd. for the registration, certification and further distribution of syringes in Ukraine.

2009 2010 6 months of 20110

20

40

60

80

100

90.6 87.3 91.9

9.4 12.7 8.1

Sales structure, %


KONFA

Ownership structure

Financials

General information

Location

•Open Joint-Stock Company “Konfa” (Short name: Konfa OJSC)

•Web-site: www.kk.byName of the company/info

•Confectionery goods manufacture (spice cakes, cookies, pan goods, wafers and soufflé sweetmeat)Main activity

•6.7 thousand tons of confectionery goods/year•The total production floor space is 3,720 and the volume of production premises is 23.5 thsd m3.

Production capacity

•375 employeesPersonnel

100%

Private owners

75%

State

25%

Molodechno

INDICATORSYEAR

2009 2010 9M 2011


Revenue from sales of goods, works, services, BYR mn 22,078 27,311 43,694

Net profit, BYR mn 56 347 1,028

Goods, works, services sales margins, % 3.8 7.0 7.5

Receivables, BYR mn 4,335 5,290 9,127

Payables, BYR mn 3,759 4,591 6,391

Average wage, BYR thsd 741 904 1,133(6M 2011)

Production

Personnel

Sales

KONFA

2006 2007 2008 2009 20100

1,000

2,000

3,000

4,000

5,000

6,000

0

1,000

2,000

3,000

4,000

5,000

6,000

3,824 4,1235,027 5,165 5,354

Output structure in 2006-2010

Spice cakes Cookies Wafers Souffle sweetmeatPan goods TOTAL

17%

31%

13%

9%

10%

12%

8%

Personnel structure by age

under 25 25-3036-4041-4546-5051-5556 and more

375 friendly and cohesive people presently work in the Company.The Company is represented by a young and enthusiastic team of employees. More than 60% of the staff are under 40 years old.

Konfa OJSC sells its products predominantly in the local market. The main export markets are Russia and Germany. Wholesale depots and retail chains are among the main customers.

2009 2010 6M, 20110

20

40

60

80

100

91.1 95.4 97.4

8.9 4.6 2.6

Structure of sales, %


MINSK MARGARINE PLANT

Ownership structure

Financials

General information

Location

•Open Joint-Stock Company “Minsk Margarine Plant”•Web-site: www. margarin.by NAME OF THE COMPANY

•production of margarine products (margarines, cooking and confectionery fats), mayonnaise, production of ketchup, horseradish and mustard.

MAIN ACTIVITY

•disposal of waste-soap stock;•refining, freezing out and deodorization of fats and oils;•packing of vegetable oil.

OTHER ACTIVITIES


100%

Private owners 6.2%

State

93.8%Minsk

INDICATORS YEAR

2009 2010 9M 2011


Revenues from sales of products/work/services, BYR mn 69,535 95,613

127,487


Net profit, BYR mn 4,006 5,220 14,257

Sales margins, % 14.1 10.3 17.8



Average wages, BYR mn 1,177.9 1,421.7

1,796.2(6M 2011)


Production


Sales

The Company`s activities are certified for compliance with: STB ISO 9001-2009 since 2006 HACCP in the production of

mayonnaise products since 2010

MINSK MARGARINE PLANT

PRODUCTS, TONS 2008 2009 2010 6M 2011

Margarine 5,630 6,995 8,454 4,669Mayonnaise 6,658 6,278 5,597 3,059 Packed vegetable oil 2,985 1,926 2,714 2,045Unpacked vegetable oil 7 182 2,506 n/aKetchup 286 523 427 n/aHorseradish 37 92 65 n/aMustard 10 74 64 n/a

KEY ADVANTAGES

an advantageous location in the center of Minsk

highly-qualified staff

natural high-quality products

20% market share for margarine products, 10% - for mayonnaise products

The Company mainly operates on the domestic market, but is increasing its sales abroad. Main consumers of the products are state and private enterprises of trade and industrial processing.

2009 2010 6 months of 2011

0

20

40

60

80

100

99 98.2 96.3

1 1.8 3.7

Sales structure, %



Documents

Pilot Privatization Program In Belarus