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Russian Helicopters reform acquisitions to benefit subsidiaries and suppliers

Russian Helicopters, the holding company controlling the Russian rotorcraft industry assets and a subsidiary of United Industrial Corporation Oboronprom, has started reforming its acquisition activities, including the processes leading to the rendering of services, delivery of equipment, materials, parts, and units - everything necessary for the business of the holding company. The reform is carried on in two major directions: centralization of key unit and component purchases (purchased component goods) both for mass-produced models and those in development, and an introduction of an electronic trading system for the acquisition of services, equipment, materials, parts, and units for production needs.

In accordance with reform plans, on "Russian Helicopters Day" at Moscow Airshow MAKS 2011, 16 August 2011, Russian Helicopters CEO Dmitry Petrov announced the creation of a new subsidiary within the holding company structure: Acquisitions and Logistics Center, Limited (ALC Ltd). On 1 September 2011 ALC Ltd was approved as an Authorised Acquisitions Organisation that will become the sole acquisitions center for Russian Helicopters. On 20 September the heads of Russian Helicopters and ALC held their first joint meeting with the major suppliers of the holding company. The new approaches and paradigms of acquisitions activity were announced at this meeting.

Dmitry Petrov, CEO, Russian Helicopters, announced: "After consolidating and bringing together the assets of the rotorcraft industry, the holding company continues its drive for modernisation and has started renewing the acquisitions policy. The creation of Acquisitions and Logistics Center will allow us to bring more order in our relations with suppliers of key units and components for rotorcraft in production, modernisation, and development at the Russian Helicopters enterprises. Diversification of acquisitions through the use of advanced electronic tools will ensure transparency, support fair competition, and will let us broaden our supplier pool for services, equipment, and materials needed for production."

The main goal of the new Acquisitions and Logistics Center is to optimise and unify the acquisitions activities to the best of interests of all helicopter-building enterprises: Kamov, Mil Moscow Helicopter Plant, Helicopter Service Company, Progress, Ulan-Ude Aviation Plant, KumAPP, Reduktor-PM, Kazan Helicopters, Stupino Machine-Building Enterprise.

To achieve the above efficiently, the Acquisitions and Logistics Center will need to organise and procure the centralised purchases of key units and components (purchased component goods) for helicopters in production, modernisation, and development. This includes:

1. Engines;

2. Auxiliary Power Units;

3. Main rotor masts, rotor heads, swashplates;

4. Reductors;

5. Steering systems, control units;

6. Navigation and avionics suites;

7. Autopilot systems;

8. Gear struts.

In accordance with the resolution of the Promoter - Russian Helicopters holding company - Alexander Litvinov has been appointed the Director General of Acquisitions and Logistics Center. Mr. Litvinov earlier held the position of 1st Deputy for Supplies to Executive Director of Kamov JSC. During the initial stage the ALC office will be based on Kamov territory.

At the same time, starting from 1 September 2011 Russian Helicopters have started to carry out all acquisitions using electronic trading systems. It is planned to make up to 20% of all Russian Helicopters acquisitions electronic by year-end. A corporate B2B-VR platform has been developed for this purpose, based on the Unified Electronic Trade System B2B-Center.

The choice of the partner for electronic trade was on a competitive basis, taking into account such criteria as the number of transactions serviced, efficiency of trade, number of suppliers, price of services, experience in similar projects. B2B-Center won the contest, having the most appropriate functional capacity for efficient electronic trading and abundant experience in e-commerce.

The B2B-VR corporate platform integrated into B2B-Center will be used to purchase equipment, machinery, and other goods and services necessary for the production of military and civil helicopters. Under the new partnership Russian Helicopters and ?2?-Center are offering all companies interested to take part in trading to sign up on special conditions. The offer will be available until 31 December 2011.

The move to switch to e-commerce is yet another stage in reforming the acquisitions system of the Russian Helicopters holding company. The reform incorporates a number of measures to improve fair competition, raise information transparency, and optimize the holding company spending. It provides for a diversification of acquired goods, an introduction of a monitoring system for electronic transactions, as well as the switch of all subsidiaries to e-commerce. The methodology for the change in Russian Helicopters acquisitions activity was developed in accordance with the current policy of the Government of the Russian Federation. The acquisitions system that has been introduced and is now being used conforms with the requirements of Law number 223-FZ of 18 July 2011 "On the acquisition of goods, work, services by some types of legal entities", including the requirements to electronic acquisitions.

Press release issued by Russian Helicopters, JSC on October 3, 2011


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