From tactics - to strategies

The magazine "Company" publishes an article by Andrei Krasavin.

"The general director appeared at Magnitogorsk. The main owner Viktor Rashnikov moved away from operational management, preserving influence on one of the largest metallurgical assets of the country.

There were plenty of exemptions when the main business owners moved away from operational management of enterprises. This is Roman Abramovich and Oleg Deripaska. One of the last stories of this kind is the co -owner of the "Mechel" Igor Zyuzin. Last summer, he left the director's post, but headed the company's board of directors. The personnel permutations in Sword were explained by the formation of a new management system and the successful exit of the company from the crisis. Igor Zyuzin owns 66% of the shares of Mechel.

At the time of the crisis, his enterprise had a very high debt load (about $ 5 billion), but by mid-2009 he managed to agree on restructuring with creditors. "Business owners, as a rule, lead their companies to certain tasks, for example, IPO or in a crisis," experts say. In 2009, his main shareholder Oleg Deripaska became the general director of Rusala to restructure a multi -billion dollar debt. In 2010, during a joint-stock conflict in Kazakhgold and before the withdrawal of OJSC Pole Gold to IPO, Mikhail Prokhorov headed his company.

Sources of KO said that Viktor Rashnikov was going to move away from the operational department of MMK OJSC even before the crisis, but decided not to do this at a difficult time for the enterprise. “Now the crisis is left behind, Magnitogorsk has implemented almost all its main projects (the construction of the Stan-5000 and the first stage of the camp-2000) and has long gone beyond the Magnitogorsk platform,” says MMK representative. “In the crisis, business owners wanted to show the market and their counterparties that they are personal responsibility for the company,” the Unicredit Securities analyst Marat Gabitov argues, “now there is no such need.” Nevertheless, the expert believes that Viktor Rashnikov will continue to monitor his business and will still be involved in the process of making important decisions and in operational activities.

Iron castling

We thought about the new management structure at the Magnitogorsk Impress Player at the end of last year. It was decided to transfer the operational department of MMK OJSC from the management company (UK) to the general director of OJSC, and the Criminal Code, which is also headed by Viktor Rashnikov, should be engaged in strategic management.

The main intrigue unfolded around the name of the general director.

Two candidates claimed this position - Boris Dubrovsky and Vitaly Bakhmetiev. Both have worked on Magnitogorsk for many years, since 2009 he was the first deputy general director of the Uralvagonzavod (the last position at the MMK - Executive Director), Bakhmetyev - vice president of the Criminal Code of the MMK for commerce. The shareholders at the annual assembly were elected general director of Boris Dubrovsky. “This person has a very extensive experience in the industry,” says Yuri Volov, analyst in Moscow Bank. The new head of the enterprise worked on Magnitogorsk 32 years. In 1976, he came to the plant by a student of the controller in the technical control department, and by 2008 he became the executive director of OJSC MMK. In 2009, Dubrovsky was invited to the Uralvagonzavod, where he was seduced by new prospects. But he returned to Magnitogorsk already in a new status. “This person worked in the company for many years, so there is no concern that the enterprise’s strategy will not exist,” said Igor Lebedinets VTB Capital CJSC. “The general director will deal with the operational work of the entire holding,” Viktor Rashnikov told shareholders. “I will also have enough work, I will be responsible for strategic development and investment projects. Whoever hoped that I would leave, do not hope. (...) I work and continue to work at the plant. I don’t plan any moves.” "As for the transfer of operational management, the purpose of this decision is to increase the efficiency of the MMK and its capitalization," the company owner explained. “If a person does not plan to get out of business, it would be correct to transfer it to someone from his family,” says Marat Gabitov. The recent appointment of the youngest daughter of Olga Rashnikov to the post of finance director of OJSC MMK - according to the expert, is an extra confirmation that the owner does not plan to exhibit a missile system for sale.

Light duty

Magnitogorsk managed to complete the construction of the Stan-5000 for the production of a sheet for large-diameter pipes, completes the construction of the first stage of the camp-2000 for the production of sheet for the automotive industry, the MMK-Takas plant was built in Turkey, production projects in St. Petersburg and in the suburbs, as well as its own raw material base: the coal company Belon and Bakalskoye ” Rudoist Management. “Key projects of the MMK of recent years have been completed or close to this,” emphasizes Yuri Volov, “therefore, Rashnikova’s departure will fundamentally change anything. Moreover, he will continue to engage in the strategic development of the plant.”

Despite the fact that steel prices are far from the ideal today, the company feels quite confident and does not experience any special problems. With the finances of Magnitogorsk, everything is also successful quite safely. “Among the enterprises of the metallurgical sector, this is the least overloaded company,” says Igor Lebedinets. “She never sought to purchases, such as Severstal and NLMK, and has always been quite conservative about its development.”
The specifics of the production of MMK - Automobile and Pipe Liszt.

These are products with high added value, therefore, the margin of the company is higher than the average industry.

For the same reason, financial indicators are more stable and less depend on the demand for metal in world markets. At the end of 2010, the net debt of MMK amounted to about $ 3.5 billion. But the ratio of this value to EBITDA is 1.88, which allows the plant to feel confident in the long market.

Last year, the company was able to place two issues of exchange bonds worth 13 billion rubles. In addition, in February, the company’s board of directors registered 10 issues of ruble bonds of 5 billion rubles. Each, thus, MMK, if necessary, can attract up to 50 billion rubles. to finance your projects. At the same time, Magnitogorsk has enough free funds, taking into account highly liquid investments - about $ 1.7 billion at the end of 2010.

The prospects of the metallurgical sector are encouraging. China consumes more and more steel and raw materials every year, which pushes up prices up. In addition, the demand for steel products from gas, oil companies and automobile concerns is growing, one of the main suppliers of steel for which is MMK. It is no coincidence that on the eve of the annual assembly of Magnitogorsk shareholders, the Fitch agency increased the company rating to one step to "VV+".

In their free time
The problem of the enterprise is weak security with its own iron ore raw materials, which is about 30%. This is a difficulty and should be decided by the new general director, experts say. In the coming month, MMK will decide on entering the project on the development of the Prioskolsky iron ore field. If the company takes part in the project, the Prioskol GOK exit to the design production capacity will allow MMK to provide 80% of its needs in iron ore. “Having behind their backs such good financial resources, the team of top managers will act more actively not only in the development of their own projects, but also in the M&A market,” Igor Lebedinets suggests. “If in 2007-2008, Russian metallurgical companies made purchases around the world, MMK did not seek abroad. But now, perhaps, it will revise the strategy of its development.” It is possible that Viktor Rashnikov will discuss such transactions with foreign players or concentrate on finding foreign steel companies with a deeper processing of raw materials, which gives the product high added value. He has a corresponding experience. By November 2011, Magnitogorsk plans to complete the transaction on the acquisition of 50% minus 1 Promotion of a joint venture in Turkey MMK-Takas from the Atacash family and thus will receive full control over this structure. The idea of ​​the Turkish project is to replace Turkish imports with their own production within the country and begin export to the Mediterranean countries.

However, Viktor Rashnikov, moving away from the operational control of the magnetic, will be able to do his own projects. He owns a share in separate development projects in Moscow.

“Who was hoping that I would leave, - do not hope. (...) I work and continue to work at the plant. I do not plan any crossings.”