Yars is hampered by the plant

The developer of mobile ground systems encountered problems in their production.
As it became known to Kommersant, the Moscow Institute of Thermal Technology (MITT) encountered problems with the performance of defense contracts for the supply of Yars mobile strategic missile systems. Due to the difficult economic situation and problems with creditors, the Podolsk Electromechanical Factory can not timely supply equipment for the Yars hydraulic systems. The Institute management has asked Rostec to initiate a duplicate production at the Kovrov Electromechanical Plant. But this, as recognized at MITT, will take approximately one and a half years.

The main problems of the Podolsk Electromechanical Factory (PEMZ) and future negative consequences are stated in the letter of the head of the Moscow Institute of Thermal Technology (MITT), Sergey Nikulin, sent to the first deputy general director of Rostec, Vladimir Artyakov. Mr. Nikulin writes that according to the contract dated 29 September, 2011, the MITT shall organize the manufacture and delivery "U175M1 units" (autonomous launchers of the Yars mobile ground missile complex) to the Ministry of Defense. An integral part of these units is a hydraulic system, supplied by the Central Research Institute of Automatics and Hydraulics (CRI AH) and its subcontractor for the supply of equipment for this hydraulic system is PEMZ.

"The company does not fulfill its obligations under the contract with CRI AH, it is on the verge of bankruptcy," says Mr. Nikulin. He said that PEMZ received the advanced payments for 80% of the volume of deliveries in 2017, but the purchase of components was not carried out in time, and there has been no supply of equipment since June 2016: "It jeopardizes the performance of tasks of the state defense order." To solve this problem, the MITT raised the issue of creating a duplicate production at the Kovrov Electromechanical Plant (KEMZ; part of the company High-precision Systems belonging to Rostec). But this, according to Sergey Nikulin, requires pre-production for a year and a half. "I ask you to assist in the recovery of production at the Podolsk Electromechanical Factory and organize the production of equipment for the U175M1 hydraulic unit at the Kovrov electromechanical plant," he concluded.

In 2016, according to the commander of the Strategic Missile Forces, Sergey Karakaev, the Strategic Missile Forces received 23 missiles (including silo-based missiles in Kozelsk). The Yars mobile ground systems were received by the regiments of Yoshkar-Ola, Irkutsk, Novosibirsk and Tagil divisions, and this year rearmament will be continued in Yoshkar-Ola, Novosibirsk and Irkutsk units of the SMF (according to "Kommersant", in 2017 they expect to get no less than 20 missiles).

Kommersant failed to contact Sergey Nikulin yesterday, and Rostec declined to comment. However, some industry sources of Kommersant reported that the state-owned corporation management is familiar with the letter. The situation with PEMZ is extremely difficult, they say: Rostec owns a 20.5% stake in the plant (the main shareholder of PEMZ is the State Duma deputy Umakhan Umakhanov), and all property and contracts back in the 2000s were transferred to a subsidiary of PEMZ, PEMZ-Spetsmash. It is burdened with debts: for example its debt to Sberbank is up to 1.388 billion rubles. (these funds, according to Kommersant, were necessary for the implementation of contracts). "Since the company introduced a procedure of observation, the bank is obliged to take measures to incorporate their demands in the register of creditors," said Vice-President, Director of the Department for work with troubled assets of Sberbank, Maxim Degtyarev, to Kommersant. "Simultaneously, the bank initiated a foreclosure procedure in respect to other assets of the group of companies, which are not related to the defense industry." He added that other commercial assets of the group (of which Umakhan Umakhanov is a shareholder), in contrast to the defense plant, the bank is ready to bankrupt itself. Earlier, Sberbank demanded JSC Zhukovka *****, the owner of the Labyrinth shopping center on Rublevo-Uspensky highway, to pay the debt in the amount of 1.3 billion rubles. Sberbank, as previously reported by Kommersant, is trying in court to recognize the bankruptcy of the borrower, which may be associated with the family of Umakhan Umakhanov.

Kommersant's sources, close to the state corporation, claim that KEMZ is ready to commit itselves to the production of equipment for hydraulic systems, but the contract shall be modified accordingly, since the contractor of the defense order in this part is PEMZ-Spetsmash. "Let's wait for the decision of the court, and then we will think about how to remedy the situation, but the armed forces won't be left without Yars," said a top manager of one of the sectoral enterprises.