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SIBUR Outsources Tire Works to Marketing
SIBUR announced Monday its launches reorganization of the tire business. By this fall, the stocks of SIBUR-controlled four tire works will be transferred to SIBUR-Russkie Shiny (Russian for SIBUR-Russian Tires), which will also operate financial flows of the above enterprises. Currently SIBUR-RSh is engaged exclusively in marketing and selling deals. At SIBUR, they say the tire business will be split off into a unified structure, as the company needs an outside investor for its development. Therefore, the above move means SIBUR intends to dispose of the portion of its business to the third party.
Established in 2002, SIBUR-Russkie Shiny (or SIBUR-RSh) is 100 percent owned by SIBUR. The company acts as a general dealer for SIBUR tires. It is in charge of the distributorship net in Russia and of the marketing policy on the tire market.
SIBUR holds over 76 percent in Yaroslavsky Tire Works, around 83-percent stake in Omsky Tire Works, 100 percent in Uralsky Tire Works, more than 82 percent in Voltire-Prom (Volzhsky Tire Works). 2004 unit volume reached 15.1 million tires worth 13.54 billion rubles.
It was in February of 2005, when SIBUR launched capitalization of its indebtedness by transferring liquid assets (including 100 percent in SIBUR-RSh and tire works) to a new company to be 100-percent owned by Gazprom. Gazprom holds 90 percent in today’s SIBUR. But in view of the yesterday’s announcement, the reorganization will go beyond the initial plans with the tire business actually outsourced into an independent division headed by SIBUR-RSh.
At SIBUR, they specified to Kommersant that, along with setting up a new company, a tire holding will be created, i.e. the stocks and shares of tire works will be transferred directly to SIBUR-RSh. “The concept of tire business split-off was presented to Gazprom’s Board of Directors on February 4, simultaneously with the program to capitalize SIBUR indebtedness,” said Dmitry Konov, senior vice president at SIBUR. “No one in the management of our parent company has opposed that scheme.”
The new company will have full authority to manage the tire business of SIBUR, including determining production, marketing and price policy. All tire works will continue operating under processing patterns, i.e. the head company will be still buying raw and selling product with the works paid for their production. But it will be SIBUR-RSh that will be in charge of processing contracts. When reorganized, the company will be led by Andrey Brodovich, today’s head of the management.
According to Konov, creation of the new holding will complete in the third quarter of this year. “We are willing to seriously isolate tire business from other activities, because it principally differs in structure and economy,” Konov said. “Moreover, it is vital to consolidate profit centers for tire production, currently split between SIBUR, SIBUR-RSh and the works within one and the same structure – to pack them under a common cover. Then, we will be able to attract an outside investor to develop this direction. Already now, the necessity of this move is evident.”
Not long ago, SIBUR was in talks about selling portion of its tire business to the French Michelin. But negotiations have come to a standstill. At present, SIBUR is not negotiating with any potential buyers, though it “is consulted on the issue,” Konov pointed out.
www.kommersant.com
All the Article in Russian as of Mar. 22, 2005
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