Investment project

«Modernization of the foundry»

MAGNOLIA

Naberezhnye Chelny city

2014 г.

About the company

Date of foundation of the foundry-mechanical plant "Magnolia" in Naberezhnye Chelny is the

20th of November, 1989.

Activities of the company:

• Aluminum die casting, chill casting and sand casting;

• Design and production of aluminum radiators and components for LED lamps;

• Production of energy-saving LED lamps.

The company has developed more than 100 types of aluminum castings. These are products for

machine industry as well as for household appliances and national economy. Over the past 3 years

output has increased tenfold. Magnolia is a supplier of aluminum products for the main conveyor of

OJSC "KamAZ". Production capacity allows to produce up to 200 tons of castings per year.

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MAGNOLIA

The content of project

Due to risks to engineering, arising as a result of Russia's accession to WTO a deep

modernization of our foundry is required to achieve the level of competitiveness with the world's

leading manufacturers. Modernization will be carried out using high-tech and cost-effective

equipment, establishing effective methods of production.

Five years ago Foundry, which was previously operating for 13 years, was purchased, its

best revenue reached 6 million rubles per year.

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MAGNOLIA

*2015 г. – launch of the project

0

50

100

150

200

250

300

350

400

450

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

13 16 37 52

50 63

111

311

371 389

406

Revenue million rub.

14, 120 million rubles

183, 086 million rubles

1. Introduction of energy saving technologies:

- circulation water supply system;

- autonomous heating system;

2. Acquisition:

- die casting machines;

- equipment for machining;

- express laboratories.

The total project cost is 197.206 million rubles

The content of project

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MAGNOLIA

Purchased equipment

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MAGNOLIA

№ Equipment Quan-ty (pcs.) Sum, thousand rubles.

1 X-ray machine РПД "200" 1 10 016,00

2

Coordinate measuring machine Axiom too 600

CNC 1 2 702,30

3 Machining center M650 R AIS 1 6 780, 00

4 Foundry complex TST 250 K 2 43 365, 00

5 Foundry complex TST 400 K 4 101 407, 00

6 Furnace melting - TA 200/12 K 3 1 535, 10

7 Express Lab FVN-F20 CNR Italia 1 2 070 ,00

8 Universal milling machine FUV 401 1 4 070, 00

9 Grinding machine 3Д725 1 5 470, 00

10 Internal Grinding Machine 1 5 670, 00

Total: 16 183 085,40

Furna

ce

САТ-

01

Before modernization

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MAGNOLIA

М

die-casting

machine

mod.71109

Cast.

machine

mod.

А711А10

Die-casting

machine

М711А07

Die-casting

machine

mod.

7А1108

die-casting

machine

mod.7А11

08

die-casting

machine

mod.71109

Mechanical

workshop

Casting

Machine

mod.А71

1А10

Temporary storage

of metal

Welding

point

Die-casting section

Flash

Canteen

Fitter’s area

Area of finished

products

Rejection

area

Instrumental

and

distributing

storage

Rooms

Turning section

Vertical

milling

machine

6Р82Г

foundry

complex

TST 400 K

- retiring equipment

Furna

ce

САТ-

01

Furna

ce

САТ-

01

After modernization

7

5. Universal milling

machine

FUV 401

4. F

oundry

com

ple

x

TS

T 4

00 K

wit

h

furn

ace

3. F

ou

nd

ry c

om

ple

x

TS

T 4

00

K с

печ

ью

4

.Fo

un

dry

co

mp

lex

TS

T 4

00

K w

ith

furn

ace

1. F

oundry

com

ple

x

TS

T 4

00 K

wit

h

furn

ace

Canteen

Rooms

welding

point

Fitter’s area

10. Intragrinding

machine

Foundry

com

ple

x

TS

T 4

00

К

2. F

oundry

com

ple

x

TS

T 2

50 K

2. F

oundry

com

ple

x

TS

T 2

50 K

3 F

ound

ry c

om

ple

x

TS

T 4

00 K

wit

h t

he

furn

ace

Warehouse

turning section

6.Furn

ace

ТА/20

012К

6.Furnac

e

ТА/2001

2К

6.Furna

ce

ТА/200

12К

7. E

xpre

ss

labora

tory

Die-casting section Gates

9. F

lat-

gri

ndin

g

mac

hin

e 3Д

725

Mac

hin

ing c

ente

r

М 1

000 б

/у

12

. M

ach

inin

g c

ente

r

М 6

50

R A

IS 11. CMM

Axiom too 600

CNC

8 The proposed

location of the x-

ray machine RPD

200 (50m ² of

attached premises

with a separate

entrance)

Gates

Gates Machining area (cleaners)

New building

MAGNOLIA

Retiring and purchased equipment

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MAGNOLIA

№ Retiring equipment year of

manufacture

Quan-ty

(pcs.) №

Purchased equipment, instead of

retiring one

Quan-ty

(pcs.)

1 Casting machine

mod.А711А10

1980 1 1

Foundry complex TST-400K 1

2 Die-casting machine

mod.7А1108

1980 2 2

Foundry complex TST-250К 2

3 Die-casting machine

М711А07

1979 1 3

Foundry complex TST-400K 1

4 Die-casting machine

mod.71109

1982 2 4

Foundry complex TST-400K 2

5 vertical milling machine

6Р82Г

1978 1 5

Universal milling machine FUV 401 1

6 Furnace САТ-01 1980 3 6 Furnace melting- ТА 200/12К 3

Total 10 Total: 10

Additionally acquired equipment

7

Express lab. FVN-F20 CNR Italia 1

8 X-ray machine РПД "200" 1

9 grinding machine 3Д725 1

10 Internal Grinding Machine 1

11

CMM Axiom too 600 CNC 1

12 Machining center M650 RAIS 1

Total: 6

Total: 10 Total: 16

1. Increase of orders from automakers will help to replace import of automotive components and to

create conditions for transition to the Russian-made components.

- «Toyota» (Japan, Leningrad Region)

- «Ford Соллерс» (USA, Naberezhnye Chelny and Elabuga)

- «Knorr-Bremse» (Germany, Naberezhnye Chelny)

- «Federal Mogul Naberezhnye Chelny» (USA, Naberezhnye Chelny)

- «Kamminz - Kama» (USA, Naberezhnye Chelny)

- «ZF КАМА» (Germany, Naberezhnye Chelny)

- «КамАZ and Marcopolo» (Brazil, Naberezhnye Chelny)

- «КамАZ and CNH» (Italy, Naberezhnye Chelny)

- «Fuzo КамАZ Truck Rus»(Japan, Naberezhnye Chelny)

- «Камаz» (Germany, Naberezhnye Chelny)/

2. Creating of export potential:

- Access to foreign markets (Belarussia, Kazakhstan, Kyrgyzstan, India, Germany).

Modernization goals

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MAGNOLIA

Aluminum die casting, chill casting, sand casting, machining

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MAGNOLIA

die casting chill casting sand casting machining

aluminum radiator of LED Lamp

of housing and public utilities

die casting

Pump housing ИЮАШ 4061-

1307015 (for YAZ vehicles)

chill casting

Housing 37.1702209-200

for mechanism of gear box

on Kamaz and Nefaz vehicles

sand casting

Cover ФТОТ

(fuel system

Of KAMAZ vehicles)

Die-casting

Design and production of aluminum radiators and components

for assembling LED lamps for housing and public utilities

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Radiators of lamps are specially designed for sufficient heat removal from the LED and are made of aluminum.

Radiators are different with their wear resistance and vandal-proof qualities. Today we have the possibility to produce

more than 20 000 pieces of aluminum radiators, assembly sets and LED lamps per month.

We supply our assembly sets to more than 80 manufacturers of LED lamps of different regions of Russia.

MAGNOLIA

Assembly set of parts for assembly of LED lamp

for housing and public utilities

Aluminum radiator of lamp

for housing and public utilities

Aluminum radiator of

budget lamp

for housing and public utilities

Production of energy-saving LED lamps

of housing and public utilities

Radiator of energy-efficient

LED lamp

LED lamp for public places

Lamp for public places is in series since June 2012 with capacity of 20 thousand pieces per month.

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Radiator of budget energy-efficient

LED lamp LED lamp for public places

MAGNOLIA

Quality system of products, services

The company currently has a system of quality management, "Magnolia" is certified for

compliance with GOST R ISO 9001-2008 (ISO 9001: 2008). Registration number ROSS

RU.IK79.K00273. Expiry date: 30.11.2015.

A program on implementation and preparation for the certification of quality

management system is drawn up in compliance with the international standard ISO / TY

16949. On May 16, 2014 under a contract with the Association of certification "Russian

Register" LLC "PP-Volga region" the first stage of certification audit QMS was successfully

passed, the second stage of certification audit is appointed in late July 2014. Preliminarily

obtaining of the certificate ISO / TY 16949 is scheduled for August 2014.

Also, since 2011 the concept of "Lean production" including 5 S Kaizen TPM is

developed and implemented in the company.

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MAGNOLIA

Key project figures

Sum of investment attraction – 177,485 million rub. (90%)

Own capital – 19,721 million rub. (10%)

Investment period – 4,5 years

Interest rate – 12 %

Project implementation period - 5 years

Discounting rate – 16 %

Net present value (NPV) – 29,865 million rub.

Internal rate of return (IRR) – 23 %

Profitability index of investment (PI) – 1,17

Payback Period (РВР) – 3,3 years

Discounted payback period (ДРВР) – 4,4 years

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MAGNOLIA

Efficiency of the project

Economic effect - 29 865 thousand rubles.

Budget effect - 60,170 thousand rubles.

To the budget of the Republic of Tatarstan - 19 269 thousand

rubles.

To the federal budget - 40 901 thousand rubles.

Social effect - creation of 55 workplaces

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Kama innovative territorial production cluster

In November 2012 foundry-mechanical plant of Naberezhnye Chelny

"Magnolia“ was included in "Kama innovative territorial production

cluster". (Minutes of the extraordinary general meeting of the members of

Non-Commercial Partnership "Kama innovative territorial production

cluster" from 27.11.2012).

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MAGNOLIA

As part of the state support of small and medium business in 2014-2016 an

application for grants is filed:

1. for professional training, advanced professional training and internships of

employees in the amount of 3,096 million rubles.

2. for participation in the exhibition - fair and communicative activities in the

amount of 1.995 million. rubles.

3. to create "Center of prototyping with introduction of modern technologies of

scanning and 3D metry on the basis of the existing foundry-mechanical plant"

Magnolia", amounting to 80, 596 million rubles.

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MAGNOLIA

Kama innovative territorial production cluster

Ministry of Industry and Trade of the Republic of Tatarstan

1. The project "Modernization of the foundry" entered the catalogue of

investment projects of the Republic of Tatarstan in 2014.

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MAGNOLIA

Ministry of Economy of the Republic of Tatarstan

1. The project "Modernization of the foundry" entered Investment

Memorandum of the Republic of Tatarstan in 2014.

2. As part of "Promotion of social economic development strategy of the

Republic of Tatarstan for the period up to 2030" the project "Modernization of the

foundry" is included as a priority investment project in 2014.

Support letter of the Ministry of Industry and Trade

Tatarstan Republic

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MAGNOLIA

Support letter of the President of Tatarstan Republic

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MAGNOLIA

Support letter of the Ministry of Economy of

Tatarstan Republic

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MAGNOLIA

• Pre-investment studies are carried out;

• Project documentation and business plan are drawn up;

• project "Modernization of the foundry" passed two stages of the competition of the

Strategic Initiatives Agency in Moscow: primary and comprehensive examination of

the field of "A new business";

• an application for protection in the Investment Council under the President of the

Republic of Tatarstan is filed.

Today the search for an investor is in progress.

A register of potential investors from May 2012 to today is created (more than 100

potential investors).

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Stage of project implementation

MAGNOLIA

Government support is needed to attract investments in the amount of 177,485 thousand rubles.

1. Ensure available, cheap and long financial resources at 12% per annum for a period of 4,5 years.

2. Support in provision of financial resources via mechanisms of government guaranties on the amount of attracted investments of 177 485 thousand rubles.

3. Creation of the possibility to provide grace-period

(delay in payment) for a period of 12 month to pay:

- main debt in the amount of 177,485 thousand rubles.

- accrued interest in the amount of 16,784 thousand rubles.

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MAGNOLIA

Together to the heights of success

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MAGNOLIA

423808, Republic of Tatarstan,

Naberezhnye Chelny, p/o box 50

Academician Rubanenko Boulevard, h. 12, p. 2.

Теl.: +7 (800) 100-29-12 (toll-free in Russia)

+7 (8552) 53-07-07 (multichannel)

Fax: +7 (8552) 53-43-20

Mobile tel: +7 (965) 610-47-11

Е-mail: office@magnol.ru

Site: www.magnol.ru

MAGNOLIA

Contacts

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