How Chemezov drove Uralvagonzavod into debt

In the Ural subsidiary of Rostec, the management may change in the near future.
Origin source
As it became known to "Octagon", the general director of JSC "NPK" Uralvagonzavod "Alexander Potapov has accumulated claims due to unfulfilled promises on the financial recovery of the corporation. Under his leadership, one plant went bankrupt, the second was on the verge; over 10 thousand people risk losing their jobs.

Errors of the management of "Uralvagonzavod" can be costly for the federal budget. The state is forced to intervene in the financial situation in the corporation in order to get it out of the debt hole. The draft law on the budget for 2021–2023 provides for the restructuring of UVZ loans secured by the state guarantee. The government will be able to extend their maturity until December 31, 2029. Presumably, we are talking about an amount of over 20 billion rubles.

The net profit of UVZ in 2019 decreased by 4.3 billion rubles compared to 2018 - to 2.9 billion rubles. At the same time, the total accounts payable of the corporation increased from 59.3 billion to 67.7 billion rubles.

Roots of problems

Located in Nizhny Tagil in Soviet times, Uralvagonzavod was the largest tank-building enterprise, employing about 40 thousand employees. The plant also produced railway cars, agricultural and construction equipment.

In 2007, Russian President Vladimir Putin instructed to create a corporation on the basis of the plant. A year later, the concern entered 11 production units, by the end of 2009 their number reached 22.

“Coordination of the activities of profile partners, the establishment of strong cooperation ties will allow by 2015 to almost double the volume of products. Moreover, the share of civilian products will amount to more than 70 percent, "- stated in the accounting report of UVZ for 2008.

However, the instability in the global financial industry did not allow reaching the planned targets. UVZ finished 2008 with a loss of 6.1 billion rubles and a debt of 17.8 billion rubles, while the utilization of production facilities was 75 percent. Support was provided by the state, spending 14.4 billion rubles to increase the authorized capital of the enterprise. The management changed - the corporation was headed by Oleg Sienko, who had previously worked in the oil and gas industry. It is believed that his appointment was lobbied by the head of Russian Technologies (Rostec) Sergey Chemezov.


One of the first actions of the new management was the creation of the logistics company Uralvagonzavod - UVZ-Logistic. She took out loans to buy cars from the parent company, which affected the position of UVZ in 2014-2016.

- There was a currency jump, interest rates on loans increased, and at the same time there was an excess of wagons on the market, Uralvagonzavod came under US and European Union sanctions, plus it required reconstruction of production for Armata. UVZ has quickly increased its debts, which it still cannot reduce to a minimum, ”industrial expert Leonid Khazanov explained to Octagon.

During the crisis, the enterprise almost stopped completely: workers were sent on vacation, salaries were delayed. In 2016, Alfa-Bank filed a claim for bankruptcy of the plant. The first stage of the litigation ended with an amicable agreement, the second - with the repayment of a debt in the amount of 7.3 billion rubles at the expense of Gazprombank funds under state guarantees.

In 2017, it was decided to transfer UVZ to Rostec, followed by the resignation of Oleg Sienko. At that time, the Deputy Minister of Industry and Trade of the Russian Federation Alexander Potapov became the new general director. He changed almost the entire staff of deputies and came out with open criticism of his predecessor, saying that the corporation was in a very difficult financial situation.

“If we started from scratch, there would be one story, and we start… I don’t want to say - from the bottom of the ocean, it would be completely sad. But we are definitely under water. Apparently, we must first emerge, fix ourselves, and then ascend into the heavens. "

Alexander Potapov
General Director of JSC "NPK" Uralvagonzavod "
Potapov announced his intention to pay more attention to the civilian equipment market, to extend loan maturities and increase the profitability of military contracts. In addition, he categorically denied rumors about possible layoffs at the corporation's enterprises and presented programs for the financial recovery of subsidiaries. However, the efforts made were not enough to save one plant from bankruptcy, the other from record losses and potential insolvency.

Yurginsky machine plant

In December 2014, UVZ-Logistic acquired 90 percent of the shares of the Yurginsky Machine-Building Plant (Kemerovo Region). In previous years, the plant was balancing on the brink of profit and loss, but still had several billion rubles in revenue. By the end of 2013, it had decreased to 2 billion rubles, and the loss amounted to 500 million rubles. Subsequently, revenue gradually decreased to 1.2 billion rubles at the end of 2018, while the loss increased to 1.8 billion rubles.

The situation was complicated by the fact that the Yurginskaya CHPP is on the balance of the plant, which provides heat and power supply to the city. Since 2013, the company has regularly violated payment discipline for the supplied gas. In December 2017, the Deputy Minister of Energy of the Russian Federation Andrei Cherezov held a meeting on the issues of ensuring energy supply to Yurga. During 2017, the preparation of the CHPP for the heating season “due to the critical financial state of the enterprise and the underfunding of the relevant activities, was under threat of disruption, repairs of the main equipment of the CHPP were carried out at an extremely low rate, there were problems with the accumulation of fuel reserves,” he said.

Yurmashzavod was recognized as a problem asset. UVZ's management has prepared a financial recovery plan for the subsidiary for 2018–2025. According to him, by 2020, more than three thousand employees were supposed to work at the plant, and the revenue was to exceed 4 billion rubles.

But already in 2019, UVZ transferred its share of Yurmash to RT-Capital, a subsidiary of Rostec for working with distressed assets.

By the end of the year, according to financial statements presented on Seldon.Basis, the loss amounted to 4.6 billion rubles. To date, according to Octagon, it exceeds 12 billion rubles.

According to List-Org, more than five thousand people work at Yurmashzavod. In September this year, the company was declared bankrupt; at the beginning of November, a meeting of the company's creditors decided to suspend economic activity from December 21, 2020. As noted in RT-Capital, this is necessary, since the plant continues to generate losses.

At UVZ, they refused to comment on the reasons that led to the bankruptcy of the Yurginsky plant, referring to the fact that now the enterprise "is not included in the structure of the holding."


In 2011, UVZ acquired ChTZ-Uraltrak (Chelyabinsk Region). From that moment on, the enterprise, like the Yurginsky machine-building plant, began to generate losses annually. In 2019, they amounted to 3.3 billion rubles, a record over the past eight years. According to a source of "Octagon" familiar with the situation, due to the almost complete absence of orders, the plant may face the same fate that befell the former Kemerovo "daughter" of UVZ.

Uralvagonzavod does not comment on the financial condition of the subsidiary. But they note that a program for the development of ChTZ-Uraltrak has been created, which involves "increasing the volume of production of road-building equipment and special products under the state defense order."

- In general, the enterprise is focused on the creation of advanced types of equipment that would provide ergonomics for the operator and the uninterrupted operation of the machines themselves. The infrastructure of production facilities is being updated, which will ensure the uninterrupted fulfillment of the state defense order by ChTZ. The implementation of a number of investment projects at production sites is being worked out, which will further diversify the enterprise, - the UVZ press service specified.

As an interlocutor close to UVZ told the publication, ChTZ-Uraltrak has repeatedly received complaints about the engineering part of production. Until recently, the federal media ignored the incident that took place at the Victory Day parade in Moscow on June 24 this year. According to an informed source, a 50-ton 152-mm self-propelled artillery unit 2S35 "Coalition-SV" stalled during the ceremonial passage through Red Square. The problem arose in the chassis of the equipment, which is produced by ChTZ-Uraltrak. According to the interlocutor of "Octagon", this case became an additional reason for dissatisfaction with the management of UVZ.


To date, the UVZ corporation includes about 40 industrial enterprises, research institutes and design bureaus in five federal districts of the country and abroad. The concern itself is annually ranked among the top 100 arms manufacturers (according to the Stockholm International Peace Research Institute, SIPRI).

In August, UVZ reported that the share of civilian products in the total volume of industrial products by the end of 2020 will be 30.7 percent. The corporation stressed that the figure corresponds to "the task set by the President of Russia to bring the share of civilian products to 30 percent of the total production of the military-industrial complex by 2025. However, they did not mention that it does not correspond to the planned figures, which were announced first by Oleg Sienko, and then by Alexander Potapov.

According to Octagon, the possibility of an official re-registration of UVZ enterprises within the framework of the division into civil and defense production is being considered, in accordance with the President's instructions and in accordance with the Rostec diversification program.

As the head of the state corporation Sergei Chemezov specified, the share of civilian products in revenue should reach 50 percent by 2025.