INVESTMENT AUDIT OF THE UDMURT REPUBLIC. VERSION 1.0 UDMURTIA ON THE MAP OF RUSSIA 1

Moscow MADE IN UDMURTIA Kirov 42,100 SQ KM Perm Nizhny Novgorod Area Izhevsk (56th/85*) Kazan Yekaterinburg

Ufa Samara 1.5M Population (30th/85*)

UDMURTIA’S LARGEST CITIES RUB 556BN 970 КМ GRP IZHEVSK 650,000 Distance from Izhevsk (33rd/85*) to Moscow: SARAPUL 98,000 2 hours

VOTKINSK 98,000 18 hours — 1200 km

GLAZOV 93,000 RUB 356,043 GRP per capita (42nd/85) KEY TRANSPORT INFRASTRUCTURE:

Trans-Siberian Railway (Balezino Station, Glazov Station)

The P320 Elabuga-Izhevsk regional highway, connection to M7 Volga.

Udmurt Republic

* ranking among Russian regions Volga Federal District (VFD) IGOR SHUVALOV MAKSIM ORESHKIN DENIS MANTUROV DMITRY PATRUSHEV 3 Chairman of VEB.RF Minister of Economic Development Minister of Industry and Trade Minister of Agriculture THE REGIONAL ADMINISTRATION HAS INITIATED AN INVESTMENT AUDIT TO SUPPORT UDMURTIA’S LONG-TERM ECONOMIC DEVELOPMENT MADE IN UDMURTIA 2014 2017 2019 2020

“VEB.RF, the Russian Export “Udmurtia’s focus on driving non- “Udmurtia is a region with “Udmurtia’s climate and Centre, DOM.RF and the SME resource-based exports, training enormous investment potential environment provide an excellent Investment strategy Map of investment Investment audit Udmurt Republic’s 2027 opportunities Social and Economic Corporation are providing people entrepreneurs and promoting and ambitious goals to develop foundation for the further Udmurtia’s 2025 The investment audit of Strategy of Udmurtia with essential support entrepreneurship, enhancing the manufacturing sector. There development of the agribusiness, Investment Strategy In 2017, Udmurtia the Udmurt Republic will tools to attract investors, open productivity and adopting best is intense demand for investment food, raw materials and consumer is aimed at enhancing undertook a massive highlight the following: The strategy will be based on new manufacturing sites, create practices from other regions, among companies in Udmurtia goods sectors. Fast growth stock-taking of its growth areas identified during the republic’s investment ━ the benefits of new jobs, upgrade existing with the proper implementation, and strong collaboration between has helped to drive promising investment resources ━ the investment audit appeal and nurturing investing in Udmurtia enterprises and promote goods is definitely the right way to the regional administration and investments in Udmurtia’s a favourable environment and developed a map of made in Udmurtia in foreign develop the region’s economy.” the Industrial Development Fund agricultural sector, where there for investment projects. investment opportunities: ━━ priority investment markets. VEB.RF has forged established by the Russian Ministry are vast opportunities on both the madeinudmurtia.ru areas The strategy’s main a comprehensive partnership of Industry and Trade. Regional Russian and international market.” ━ recommendations objectives are to: ━ with the regional administration. companies are participating in on infrastructure We are ready to participate in joint modernisation initiatives, ━━ improve the development the region’s priority investment setting up new production lines competitiveness of ━ a roadmap of priority projects on transport infrastructure and import substitution products. ━ regional manufacturing investment areas and and urban development, As a result, Udmurtia today ━ ensure a better quality projects to engage including a major upgrade of is one of the 10 leading Russian ━ of life for the people investors public transportation networks. regions in terms of the amount Another economic priority is the of private equity raised via the ━━ retain and develop diversification of Udmurtia’s Industrial Development Fund. human capital defence sector. The region’s highly In 2018, companies filed RUB 1bn ━━ develop small and education population and human worth of requests with the Fund medium enterprises capital resources provide Udmurtia and signed RUB 500m worth ━ drive well-balanced with the opportunity to enhance of contracts. In 2019, Udmurtia ━ regional development existing manufacturing capacities plans to attract around RUB 750m to produce highly competitive via the Industrial Development ALEXANDER BRECHALOV civilian-use goods using reduced- Fund for production development Governor, Udmurt Republic cost financing tools.” projects. The region’s cluster of oil and gas equipment manufacturers are going to be a powerful driver developing the oil and gas sector. Furthermore, the region is successfully facilitating the conversion of military enterprises to civilian-use manufacturing, and, in the process, creating jobs and demand for further investment.” “We will use the results of PwC’s investment audit to build a new strategy to develop the regional economy through 2027.” 5 KIRILL NIKITIN 4 Partner, Government THIS INVESTMENT AUDIT OF THE FIRST RESULTS OF THE INVESTMENT AUDIT HAVE HIGHLIGHTED and Public Sector Leader, PwC Russia THE UDMURT REPUBLIC IS UDMURTIA’S FAVOURABLE INVESTMENT CLIMATE AN INDEPENDENT ASSESSMENT

OF THE REGION’S POTENTIAL MADE IN UDMURTIA MADE IN UDMURTIA FROM THE INVESTOR’S POINT “We are pleased to present the first results of our invest- ment audit of Udmurtia. The project was initiated by OF VIEW Key advantages of Udmurtia identified the regional administration to benchmark the republic’s in the investment audit: investment potential and identify high-potential and promising investment and growth areas. 1. Our retrospective analysis has demonstrated that the 10. Udmurtia has a highly educated population to sup- region’s favourable business climate can already be port investment projects, including 16 universities. In the fall of 2017, Alexander Brechalov was appointed credited with fostering investment successes. A majority (67%) of graduates stay to work in the the governor of Udmurtia. One of his first announce- region. ments was to focus on budget optimisation, business Key objectives of the investment audit: 2. The regional administration is highly accessible for 11. Udmurtia offers a wide range of tax benefits to development and the ambitious goal of attracting 1. Identify the competitive advantages everyday work with investors. investors, including tax incentives in the Glazov and additional direct investment. Much has already been of Udmurtia for direct investment. 3. The regional administration has taken special mea- done to improve the region’s investment appeal—ad- Sarapul priority social and economic development 2. Identify direct investment growth points sures to focus on important dimensions of social and ministrative barriers have been reduced, a package of tax areas (PSEDAs). in Udmurtia economic development. and financial benefits has been developed and invest- 12. Investors and their projects receive turn-key support 4. Udmurtia provides investors with relevant informa- ment platforms at our industrial parks and priority social 3. Prepare recommendations on the in Udmurtia across ten key areas. tion about opportunities in the region via the modern and economic development areas (PSEDAs) have been development of regional infrastructure. communication channels. 13. Over the last three years (2016-2018), investment launched. These initiatives are ongoing. 4. Develop a roadmap for priority investment projects in Udmurtia have received more than RUB 5. The consumer market around Udmurtia is more than For this stage of the investment audit, we evaluated the areas. 2.5 billion from federal development institutes and RUB 2 trillion. factors that drive investment appeal and identified poten- more than RUB 2 billion from regional and municipal tially attractive investment opportunities in light of our 6. PwC analysis identified investment appeal factors development institutes. current growth rates and import volumes. across five industries selected for an in-depth audit. 14. In 2018, for the first time in the last five years, This information is intended for potential investors and 7. PwC analysis identified ten promising drivers of eco- Status: the growth of capital investments was above 10%. partners, development institutes and federal authorities.” nomic growth in Udmurtia. 1. The investment audit began in March 2019. 8. The transport infrastructure in Udmurtia offers signif- 2. The implementation roadmap will be prepared icant advantages to investors. in the third quarter of 2019. 9. Udmurtia provides investors with the opportunity 3. This document contains a summary of PwC’s to get their businesses up and running quickly at preliminary analysis. launch-ready sites. 7 CONTENTS 6 3 BENEFITS FOR INVESTORS IN UDMURTIA? — 31 P.

3.1 Rankings — 32 p.

MADE IN UDMURTIA 3.2 Transport infrastructure — 34 p. MADE IN UDMURTIA

3.3 Human capital — 38 p. 1 WHERE TO INVEST 3.4 Investment platforms and industrial parks — 40 p. IN UDMURTIA? — 9 P.

1.1 High-potential investment areas in Udmurtia — 10 p. 1.2 PPP opportunities in Udmurtia — 14 p. 4 APPENDICES — 55 P.

4.1 Business success stories in Udmurtia — 56 p.

4.2 Advantages of investing in industries selected for an in-depth audit — 71 p. 2 REGIONAL SUPPORT FOR INVESTORS 4.2.1 Dairy farming — 72 p. IN UDMURTIA? — 17 P. 4.2.2 Petroleum refining — 76 p. 4.2.3 Wood — 78 p. 2.1 Tax incentives — 18 p. 4.2.4 Machinery — 82 p. 2.2 Financial incentives — 20 p. 4.2.5 Food production — 86 p. 2.3 Infrastructure incentives — 26 p. 4.3 Key contacts in the regional administration — 90 p. 2.4 Administrative incentives — 29 p. 9 9 MADE IN UDMURTIA

WHERE TO INVEST 01 IN UDMURTIA? 11 HIGH-POTENTIAL INVESTMENT AREAS IN UDMURTIA 10 * The total cost of connecting a standard production facility to utilities (electricity, water, waste disposal, heating) in the Udmurt Republic is lower than in 14 out of 15 comparable regions. PWC ANALYSIS IDENTIFIED INVESTMENT APPEAL FACTORS ACROSS FIVE For detailed advantages of investing in the five key industries in Udmurtia, please refer to the Appendix INDUSTRIES SELECTED FOR AN IN-DEPTH AUDIT

ECONOMIC PERFORMANCE AND INDUSTRIAL PRODUCTIVITY HUMAN CAPITAL COST OF DOING BUSINESS*

DAIRY FARMING RUB/ Priority industry Izhevsk State Agricultural Academy in the Sarapul PSEDA 4 % 5.9 TONNES 4 % A field-specific university that provides 1.2 SQ M The share of livestock breeding in regional Milk yield per cow at regional farms is higher than in the most The employment rate in the sector is higher than education programmes specialised for the The average cost of acquiring industrial land company revenues is larger than in other other dairy production regions the national average and at the level of leading agricultural sector is lower than in comparable leading regions leading milk production regions peer regions

PETROLEUM REFINING Udmurtneft Belkamneft Gutseriev Oil and Gas Institute Annual oil production in Udmurtia Oil production at two new fields in Udmurtia A field-specific university that provides specialised is 11 million tonnes is scheduled to launch in 2021 education programmes for the oil and gas sector

WOOD RUB/ Priority industry Izhevsk State Agricultural Academy in the Glazov and 9 % 1.3 % 0.5 % 190 SQ M Sarapul PSEDAs The university trains forestry specialists. The share of investment in regional company The share of the sector in regional company The share of the employed in the sector is higher Job placement rates over the last three The average cost of acquiring industrial land revenues is higher than the national average revenues is higher than the national average than the national average years have been above 90% is lower than in comparable leading regions

MACHINERY Kalashnikov Izhevsk State Technical University RUB/ Priority industry in the Glazov and 2 % >10 % A field-specific university that provides education 12 190 SQ M Sarapul PSEDAs for machine building industries The share of machine building in regional Of the Russian rolled steel is produced in the Volga companies have signed specialist education The average cost of acquiring industrial land company revenues is higher than the national Federal District. contracts with the university. is lower than in comparable leading regions average The regional administration supports machine building companies in obtaining reduced-rate loans from federal development institutes, including the Industrial Development Fund

FOOD PRODUCTION RUB/ Priority industry in the Glazov and 2 % >80 % 190 SQ M Sarapul PSEDAs The share of investment in regional company The share of profitable businesses in the sector The average cost of acquiring industrial land revenues is at the level of most peer regions is at the level of comparable leading regions is lower than in comparable leading regions 12 PWC ANALYSIS IDENTIFIED 10 HIGH-POTENTIAL INDUSTRIES ...WITH MARKET GROWTH AND IMPORT SUBSTITUTION POTENTIAL 13 AND A LONG LIST OF INVESTMENT OPPORTUNITIES... IN UDMURTIA

ALL INVESTMENT OPPORTUNITIES COULD BE LAUNCHED AT THE GLAZOV AND SARAPUL PRIORITY SOCIAL AND ECONOMIC DEVELOPMENT AREAS

GENERAL MACHINERY ELECTRONICS ELECTRICAL CHEMICALS PHARMACEUTICALS CAR PARTS PLASTICS FURNITURE FINISHED METAL FOOD PRODUCTS ENGINEERING GOODS Municipal solid waste Measurement, control and Unmanned aerial vehicles Industrial and powder Active pharmaceutical Body and interior parts Flexible and rigid plastic Office and school furniture Steel and aluminium Milk (except for raw milk) sorting and disposal navigation devices (water and exploration and varnishes and paints ingredients (vitamins, packaging including self- central heating radiators and dairy products equipment meters, dimension and probing services antibiotics, hormones, Engine parts destroying packaging Cabinet furniture Organic, natural and Meat and meat by- weight control systems, amino compounds for Electrical and lighting Children’s furniture Oil and gas equipment pollutant emission control Electrical engines, wind multifunctional cosmetics treatment of oncological Plastic adhesive sheets, products (pumps and compressors, generators and spare parts equipment films, bands meters, computer vision diseases) Furniture parts and fittings Finished meat and poultry cranes and valves) sensors) Storage batteries Storage cells and large Medicinal drugs goods: semi-finished Industrial robotic CCTV and photo/video power volume batteries, (chemotherapeutic drugs, goods, delicacies manipulators recording cameras solar batteries inhibitors, generics and original drugs) Metals-processing Diagnostics and Cables and next-gen machines therapeutics medical distribution and control electrical equipment Industrial metal 3D printers equipment (for cancer and cardiovascular diseases) Energy-efficient lighting Cooling systems Portable medical devices equipment Electrical warehouse and medical robots machinery High market growth potential Import substitution potential in the Russian market Substitution potential of inbound flows from other regions in the Volga Federal District Successful project implementation INFORMATION TECHNOLOGY

Industry 4.0 automated —— Computer vision/machine UAV and visual data —— Materials modelling —— Healthcare and —— Driverless vehicle software IN 2019, AN R&D CENTRE WILL BE ESTABLISHED IN IZHEVSK TO FOCUS ON THE USE OF END-TO-END enterprise management learning software software software telemedicine software systems TECHNOLOGIES BY THE RUSSIAN POSTAL SERVICE, DRAWING ON THE TALENT BASED AT THE REPUBLIC’S VR software —— Smart city software —— Cloud-based storage and UNIVERSITIES data centre services

SUCCESS STORIES

AO SEGZ (Sarapul AO IEMZ Kupol (Izhevsk ZALA AERO, OOO Finco, GC Stena (paints AO IEMZ Kupol (Izhevsk Izhevsk Automotive Plant AO Izhevsk Plastic Plant AO Votkinskaya Industrial AO NITI Progress (steel OOO Komos Group (dairy Electricity Generator Plant) Electromechanical Plant) OOO NPO Izhevsk containing silver Electromechanical (body parts, full-cycle (adhesive materials, film) Company, AO Glazov Fur- radiators) products, meat processing) (electric carts) (solid state wave gyroscope) Unmanned Systems (UAV) nanoparticles) Plant) (solutions for production technology) niture Plant (children’s and haemodialysis) OOO Elecond-Plastic household furniture) OOO Izhdril Holding, AO Izhevsk Motor Plant AO SEGZ (Sarapul OOO Novy Dom, OOO AO Elecond (car lighting) (plastic packaging) AO Izhneftemash, GC Axion Holding Electricity Generator Plant) NPO Nort (biological flame Reductor (oil and gas (ECG machines, portable (electric engines) retardants, varnishes, upstream equipment) defibrillators) paints) AO Elecond (capacitors, AO Izhevsk Radio Plant LED) (CCTV cameras) 15 PPP OPPORTUNITIES IN UDMURTIA 14 MAXIM TKACHENKO Executive Director UDMURTIA IS ONE OF THE 20 LEADING REGIONS IN TERMS OF PPP ANO PPP Development Centre MATURITY, WITH TESTED INVESTOR SUPPORT MEASURES AND A SUCCESSFUL PPP TRACK RECORD MADE IN UDMURTIA MADE IN UDMURTIA

“Udmurtia is a leading region in terms of According to the PPP development rat- its PPP institutional, regulatory and legal ing of Russian regions as at 2019, 36 PPP PPP IN UDMURTIA IN NUMBERS framework. In particular, the region has projects with a total of RUB 21.8bn enacted a comprehensive and exten- (including 17.8bn in private investments) sive PPP project support system for all in investments are underway in Udmur- TH project stages. Under this system, func- tia. Social infrastructure projects raised RUB BN RUB BN tions are allocated between dedicated RUB 1.1bn in private equity, including 19 36 21.8 17.8 structures. The Ministry of Economics three sports facilities (RUB 800m) and out of 85 regions in the PPP projects with private total PPP investments PPP private investments coordinates and monitors PPP pro- three dialysis centres (RUB 200m). Most PPP development rating investments over as at the beginning of 2019 as at the beginning of 2019 jects on an interdepartmental level; the projects are focused on utilities infra- of Russian regions (2019) RUB 1 million as at the Development Corporation provides structure, with 25 raising a total of RUB beginning of 2019 comprehensive PPP project support and 6bn in private investments.” the Investment Activity and Competition Policy Council makes decisions on PPP projects and developments. In addition, a wide range of private investor support BEST PRACTICES measures has been adopted in Udmur- tia, and the regional administration has Heating supplies in Izhevsk Nephrology and dialysis A sports centre with a swimming a highly qualified team of PPP sub- ject-matter experts. A successful project has been com- departments in Izhevsk and Sarapul pool in the village of Pirogovo pleted in Izhevsk to ensure that all Health projects have made dialysis This sports centre has a swimming residential and public properties are services more accessible to the pub- pool, gym, athletics track and cafe- connected to heating and hot water lic. Next gen services are provided teria. The 25-metre pool was built in supplies, with reduced service disrup- under OHI (Obligatory Health Insur- compliance with FINA standards. The tions. A total of RUB 5.16bn has been ance) policies. A total of RUB 90m centre’s capacity is 2,500 people per invested in heating supply systems. was raised in private investments. day. Total private investments raised: RUB 200m ━━ In 2018, the Ministry of Con- ━━ This project won the Best PPP struction, Housing and Utilities Healthcare Infrastructure Project acknowledged this project as nomination from the Ministry of among most effective in Russia Health of the Russian Federation 02 FOR INVESTORS IN UDMURTIA REGIONAL SUPPORT SUPPORT REGIONAL

MADE IN UDMURTIA 17 19 TAX INCENTIVES 18 TYPE OF BENEFIT LARGE INVESTMENT PROJECTS INSTALLATION OF SOCIAL, CULTURAL OR UTILITY FACILITIES

Land plot lease Application criteria (minimum investment volume): Application criterion (falls under one of the following categories): without bidding UDMURTIA OFFERS A WIDE RANGE OF TAX PREFERENCES ━━ RUB 50m: agriculture, forestry, hunting, fishing and fish ━━ Social and cultural infrastructure (healthcare, culture, farming; food production; beverage production education, etc.) AND OTHER BENEFITS TO INVESTORS, INCLUDING SPECIAL ━━ RUB 100m: other types of activities ━━ Utility infrastructure (electricity, gas, etc.) TAX INCENTIVES FOR INVESTORS IN PRIORITY SOCIAL TYPE OF BENEFIT INVESTMENT PROJECTS PPP

MADE IN UDMURTIA Reduced-rate Real estate: Land plots: MADE IN UDMURTIA rent for use of land for the investment project’s payback period but no more than 75% of the annual rent amount from the date of the decision to provide AND ECONOMIC DEVELOPMENT AREAS (PSEDAS) plots and real estate five years from the date of the decision the benefit until the date of the commissioning permit Land plots: 75% of the annual rent amount from the date of the decision to provide the benefit until the date of the commissioning permit

CATEGORIES OF REDUCED RATE RECIPIENTS TAX TYPE STANDARD REGIME INVESTMENT PROJECTS PPPS INDUSTRIAL PARKS 1 PSEDAS 2

Income tax Standard regime 20 % including: 2 % federal 0 % under federal special investment contracts 0 % years 1-10 3% until 2020 glazov-gov.ru/city/ 18 % regional 10 % under regional investment contracts 13,5 % over five tax periods 5 % for five tax periods economy/TOSER 17% until 2020 For PPP involving social and cultural facilities, no more 13.5 % under special investment contracts than 10 tax periods 10 % for the following five 12,5% to 2020 12,5% to 2020 tax periods

Land tax Standard regime Standard regime Standard regime 1.5 % 0 % for the first ten years Insurance contributions Standard regime Standard regime Standard regime 30 % 22% for the Pension Fund, 2.9% for the Social 7.6 % for the first ten years Insurance Fund and 5.1% for the Medical Insurance Fund adm-sarapul.ru/ city/invest/toser- Property tax 2.2 % 0 % from the beginning of the tax period, in which the company was 0 % from the beginning of the tax period, in which 0 % five years. 0 % years 1-5 sarapul/index.php included in the register of regional investment projects’ participants for the the investment contract is concluded, for the project Property on the balance sheet of project payback period, but no longer than for 10 years payback period, but not more than 5 years. the resident/management company up to 1.1 % (additional years) For social and cultural projects and/or utility projects — located at the park no more than for 10 years 1 Benefits for industrial MET Standard regime Standard regime Standard regime 5.5 % rock, sand, clay up to 0.8 % rock, sand, clay parks are valid from June 2019 Transport tax — — — — 0 % five years. 2 There are two PSEDAs For residents, excluding cars in Udmurtia (Glazov and Sarapul) and the support Investment tax — no more than 90% of fixed asset acquisition, construction, manufacturing, The threshold value is defined in the difference between — — measures are similar. For deduction delivery, additional equipping, reconstruction, upgrade or technical re- the assessed tax to be paid to the regional budget for the the priority industries at equipping costs in the current period tax (reporting) period at 17% rate and the assessed tax to each PSEDA, please refer be paid to the regional budget at a 5% tax rate. to the Appendix. * Programme 1764 provides reduced-rate loans to SMEs in accordance with Russian Government Resolution No. 1764 of 30 December 21 FINANCIAL INCENTIVES 20 2018. The programme is overseen by the Russian Ministry of Economic Development together with the SME Corporation. OVER THE LAST THREE YEARS, UDMURTIA-BASED COMPANIES HAVE RECEIVED MORE THAN RUB 2.5BN FROM COLLABORATIONS BETWEEN THE REGIONAL GOVERNMENT AND FEDERAL SUPPORT MADE IN UDMURTIA MADE IN UDMURTIA INSTITUTES

FEDERAL SUPPORT INSTITUTIONS ORGANISATION SUPPORT MEASURES CATEGORY OF RECIPIENT RESULTS PLANS

SME Corporationand ━━ Loan and guarantee support for SMEs Small- and medium-sized Include three more SMEs in the large SME Bank enterprises supplier cultivation programme ━━ Implementation of Programme 1764* RUB 1.4BN RUB 16.1M ━━ Implementation of the reduced-rate leasing in loans received in 2016-2018 in leasing support received programme with guarantee support from the by SMEs ━━ Measures aimed at increasing the share of purchasing SME Corporation from SMEs, including a programme to cultivate large suppliers +9,8 % ━ Property support for SMEs ━ Growth in the quantity of ━━ Education programmes property transferred in 2018

Federal Industry ━━ Financing for industrial projects in cooperation Small- and medium-sized Collaboration with the Industry Development Fund with the Udmurtia Fund for Entrepreneurship enterprises > RUB 1BN Development Fund to implement the Development national Productivity and Employment in financial support for Support programme regional companies

Foundation for the Development ━━ Fundraising to co-finance the construction and Investors (PSEDA residents) Raise investments from the of Single-Industry Cities renovation of infrastructure Foundation for the Development 7 10 RUB 240M of Single-Industry Cities to develop ━━ Interest-free loans for project implementation co-financing interest-free loan in co-financing infrastructure in Votkinsk, Glazov and projects projects Sarapul in 2019-2022 22 ALEXANDER MALAKH ROMAN PETRUTSA IRINA MAKIEVA 23 Regional Project Leader, RDIF Head of the Industry Deputy Chair, VEB.RF & CEO, (Russian Direct Investment Fund) Development Fund Foundation for the Development & Director, Centre for Attracting of Single-Industry Cities Investment to Russian Regions MADE IN UDMURTIA MADE IN UDMURTIA

“The regional administration understands that the state “Companies in Udmurtia work extensively with the “MONOGORODA.RF has a reliable partner in Udmurtia. may not always be the most efficient owner and is Industrial Development Fund to obtain reduced-rate Our joint efforts have resulted in two large investment actively exploring growth areas and existing assets that loans. As of today, the fund has financed eight projects projects that have created more than 400 jobs in can be further developed and enhanced. The region- for a total of RUB 850m. An additional RUB 1.5bn in Udmurtia. I have no doubt that the region can easily al administration is strongly committed to supporting private equity has been raised for these projects. The scale up similar projects. The region has an appealing investment and expects investors to be a key resource for total volume of private equity investment in the Republic business climate, with two Priority Social and Economic the republic’s development. The administration is open will be more than RUB 2.3 billion. The implementation of Development Areas (PSEDAs) that provide investors to any form of mutually beneficial cooperation, be it pri- projects funded by the Industrial Development Fund will with key benefits. Supported by the region’s expert vatisation, PPP or support of private investment projects.” create more than 300 jobs and more than RUB 1.6bn in team, these zones are a colossal resource for fuelling tax payments. Three enterprises have already launched Udmurtia’s development.” new manufacturing lines enabled by loans from the In- dustrial Development Fund.Our achievements have been a collective effort. However, a significant role was played by the governor and regional administration. They have worked hard to find high-potential projects and raise awareness about the opportunities offered by the Indus- trial Development Fund among producers. The gover- nor’s team has placed a particular focus on developing manufacturing and raising investments in the region.We strongly believe that Udmurtia’s manufacturing sector and regional administration will continue their intense and fruitful cooperation with the Industrial Development Fund.” 25 FINANCIAL INCENTIVES 24 OVER THE PAST THREE YEARS, UDMURT-BASED COMPANIES HAVE RECEIVED MORE THAN RUB 2BN IN REGIONAL AND MUNICIPAL SUPPORT MADE IN UDMURTIA MADE IN UDMURTIA REGIONAL SUPPORT INSTITUTIONS ORGANISATION SUPPORT MEASURES CATEGORY OF RECIPIENT RESULTS PLANS

Udmurtia Fund for ━━ Reduced-rate financing for entities through Small- and medium-sized ━━ Receive additional subsidies from Entrepreneurship Development microloans at a rate of up to 7.5% enterprises the budget in the amount of RUB 71.33bn on microfinancing ━━ Acts as a regional industrial development fund RUB 661M RUB 785M and 464 microloans issued in 2018 loan portfolio as of the end of 2018 in cooperation with the Federal Industrial ━━ Engage non-budgetary sources Development Fund ━━ Issue microloans for RUB 980m 3 RD PLACE 1 % in Russia by the volume Share of overdue of microloans payments

Guarantee Fund for SME Lending Providing guarantees for liabilities of SMEs Small- and medium-sized Additionally capitalise the Guarantee Support at a rate of 1% p.a. enterprises Fund for SME Lending Support from RUB 3.3BN RUB 8.3BN the budget for RUB 22.9–29.7m to In guarantees in 2010-2018 raised by SMEs in 2010-2018 enable guarantee support to the same extent as previously 13TH PLACE 9X in terms of issued guarantees among Growth of the guarantee 85 regional guarantee organisations portfolio since 2012

MUNICIPAL SUPPORT INSTITUTIONS ORGANISATION SUPPORT MEASURES CATEGORY OF RECIPIENT RESULTS PLANS Municipal small businesses Soft-term financing of SMEs located Small- and medium-sized Transfer property from municipal support funds in the municipality enterprises funds to the Udmurtia Fund for RUB 655M Entrepreneurship Development to in microloans issued in 2016-2018 establish branches in regional cities 27 INFRASTRUCTURE INCENTIVES 26 PAVEL LIVINSKY CEO & Chairman of the UDMURTIA IS WORKING TO REDUCE THE ADMINISTRATIVE BARRIERS Management Board PAO Rosseti TO OBTAINING CONSTRUCTION PERMITS MADE IN UDMURTIA MADE IN UDMURTIA

The estimated target time for these procedures SUPPORTED PARTY MEASURE INDUSTRY is based on the following parameters: “Forming an effective collaboration with the Investors applying for Reduce the time required to obtain a construction permit in terms of: All industries regional administration and corporate and ━━ The length of networks under construction is less a construction permit individual consumers, Rosseti is investing ━━ obtaining a development plan for a land plot than 200 metres; network construction does not significant funds in network infrastructure from 20 business days to 15 business days entail land disputes on routing feasibility development. Rosseti and Udmurtia have ━ undergoing an expert evaluation ━ The client ensures provision of documents and ━ ━ signed a regulatory agreement providing from 40-55 calendar days to 22 business days materials required for the procedures in the full for long-term planning and increased amount ━━ obtaining a construction permit investments to renovate the region’s from 7 business days to 5 business days ━━ The facility is connected to the electric lines for the electricity grids. Upgrading and developing first time Udmurtia’s electricity grids will be carried out Investors applying Reduce the time required for utility connections: All industries ━ Connection to the lines based on an individual tariff using state-of-the-art technology to enable for utility connections ━ gas ━ ━ is not required a successful digital transformation. In 2019, from 40 business days to 25 business days ━ Construction of a transformer substation is not our investments in developing the region’s ━ electricity ━ ━ required for connecting the facility grid infrastructure will exceed RUB 1.2 billion. less than 20 business days Starting on 1 January 2019, Rosseti Central ━━ water and waste disposal and Volga Region’s branch, Udmurtenergo, from 44 business days to 25 business days overtook operational management and technical support of AO Izhevsk Electrical ━━ heating and hot water from 30 business days to 20 business days Networks grids and facilities. This deal—the largest electricity network asset consolidation deal in Russia—is a clear example of how operating the region’s grid under the banner 15 DAYS + 25 DAYS + 22 DAYS + 5 DAYS of Russia’s largest grid company provides land plot utlility Gosekspertiza Construction clear benefits to the public.” 67 DAYS = { development connection (State Expert permit } plan Assessment)

FROM 1 SEPTEMBER 2019, THE TIME REQUIRED TO COMPLETE THE PROCEDURES FOR OBTAINING A CONSTRUCTION PERMIT WILL BE LESS THAN 67 DAYS (SUBJECT TO CONCURRENT UTILITY CONNECTIONS) 29 INFRASTRUCTURE INCENTIVES 28 ADMINISTRATIVE INCENTIVES STARTING FROM 1 OCTOBER 2019, CHANGES WILL BE INTRODUCED INVESTORS AND THEIR PROJECTS RECEIVE TURN-KEY SUPPORT TO LAND-USE PLANNING DOCUMENTS IN MUNICIPAL ENTITIES IN UDMURTIA ACROSS KEY AREAS, LARGELY FREE OF CHARGE MADE IN UDMURTIA MADE IN UDMURTIA

INTRODUCTION OF CHANGES TO THE MUNICIPAL ENTITY MASTER PLAN ORGANISATIONS SPECIALISED INVESTOR SUPPORT MEASURES * Except for the City IN ATTRACTING INVESTMENT REVIEW STAGE CURRENT TERMS TERMS EFFECTIVE 01/10/2019 of Izhevsk and the ━ Provide a one-stop shop to support investor engagement with Zavyalovsky District ━ Request reviewed by the Administration, directive to government agencies days days prepare draft changes to Master Plan prepared** 66 25 ** Provided that there is public financing for ━━ Facilitate engagement of investors and project initiators with Draft changes to Master Plan prepared The term is set in the contract with the contractor the specified work or investment and venture funds, financial organisations, etc. Project materials uploaded to the Federal State Territorial non-public funds raised days (less term to remedy noted flaws) Planning Information System, access provided, public 90 (at the requester's ━━ Engage with government authorities and network firms on such hearings conducted expense) matters as allocation of land plots, obtaining of construction Draft Master Plan approved and signed-off permits, utility connections 41 working days 18 working days ━ Organise an Investor’s Hour chaired by the Head of the Total days ━ 225 DAYS 145 DAYS Government

━━ Review and assess investment projects proposed for implementation in Udmurtia

INTRODUCTION OF CHANGES TO MUNICIPAL ENTITY LAND USE AND DEVELOPMENT RULES*

Development RECOVERABLE INVESTOR SUPPORT MEASURES Investors REVIEW STAGE CURRENT TERMS TERMS EFFECTIVE 01/10/2019 Corporation of the ━━ Carry out expert reviews, draft expert opinions on innovation Request reviewed by the Administration, Instruction to days days Udmurt Republic and investment projects prepare draft changes to Land Use and Development 66 25 Rules prepared ━━ Organize, carry out and participate in business missions, Draft changes to Land Use and Development Rules The term is set by the contract with the contractor conferences and festivals prepared ━━ Help to draft applications for co-financing from the Industry Public hearings conducted Development Fund, the Foundation for the Development 120 working days 70 working days of Single-Industry Cities, SME Corporation and other Draft Land Use and Development Rules compliance working days working days checked, draft changes to Land Use and Development 41 18 development institutes Rules approved and signed-off ━━ Set up investment project delivery arrangements based Total days 232 DAYS 125 DAYS on PPPs, including concession agreements ━━ Provide advisory services on financial, economic and legal matters 31 MADE IN UDMURTIA

BENEFITS FOR INVESTORS 03 IN UDMURTIA 33 32 RANKINGS CAPITAL INVESTMENT PER CAPITA, RUB INDUSTRIAL PRODUCTION 33 THOUSAND/PERSON INDEX UDMURTIA IS AN ATTRACTIVE INVESTMENT TARGET AND IS AMONG 65 107 54 60 54 57 55 102 99 103 98 103 THE 30 MOST INNOVATIVE REGIONS OF RUSSIA, WITH EXTENSIVE EXPERIENCE IMPLEMENTING PPPS MADE IN UDMURTIA MADE IN UDMURTIA

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

IZHEVSK 42,100 SQ KM 1.5M 71 YEAR 710,000 RUB 29,000 4.8 % RUB 556.2BN Capital Total area Population Average life expectancy GRP in 2017 Average monthly salary Unemployment rate GRP in 2017 (72.7 in Russia on average) PEOPLE (RUB 39,000 in Russia (5.1% in Russia on average) on average) Moscow

9 70 km PPP DEVELOPMENT RATING RATING OF INNOVATIVE REGIONS OF OF RUSSIAN REGIONS (2018): RUSSIA, AIRR 2018*: *INNOVATION HUBS IN UDMURTIA

Izhevsk 1. Regional Engineering Centre of the Udmurt Republic. 5. Technology Transfer Centre, Izhevsk State Medical Academy. Increasing the technical capacity of small- and medium-sized Conducting patent research and providing opinions on 19 PLACE/85 29 PLACE/85 companies to help them develop innovative products. patentability; preparing applications for inventions; performing expert review of innovation proposals; preparing innovation 2. IzhSpetsTech Engineering Centre (Kalashnikov Izhevsk State assessment of the current perfor- reflects positive change in the proposal certificates. Technical University). mance of PPPs in Russian regions, development of regional innovation Providing the full range of engineering services for the 6. Centre for Shared Instrument Use, Udmurt State University. INVESTMENT ATTRACTIVENESS SCORE project implementation experience, ecosystems manufacturing industry; commercialising R&D output of the Offering shared use of expensive instruments, technical and development level of the institutional university; building an institutional environment and tools to process equipment and measurement techniques. implement complex technical projects; promoting innovative Investment attractiveness rating of the environment 7. Share Use Centres, Kalashnikov Izhevsk State Technical solutions and technologies. Russian regions, National Rating Agency University. 3. Engineering Centre of Innovative Research and Expert Review, 8. Centre for Share Use of Scientific Equipment “Centre of Physical (2018) RANKING OF RUSSIAN REGIONS ADMINISTRATIVE PRESSURE Udmurt State University. and Physicochemical Analysis Methods, Investigation of Providing engineering, advisory and expert services, developing BY SOCIOECONOMIC STATUS, INDEX Properties of Surfaces, Nanostructures, Materials and Products”, UDMURTIA and implementing projects, facilitating rapid commercialisation Udmurt Federal Research Centre, Ural Branch of the Russian IC1 IC2 IC3 IC4 IC5 IC6 IC7 IC8 IC9 of market-oriented projects; conducting employee trainings RIA RATING 2017 Academy of Sciences. for institutions, organisations and enterprises and fostering the Carrying out fundamental and applied research; developing establishment of new SMEs. and implementing new experimental techniques. High Medium Low PLACE/85 LEADING REGIONS 4. Technology Transfer Centre, Udmurt State University. 35 10 Enabling development and promotion of innovative projects; carrying out expert review of the innovative potential of projects the assessment covers the size of the аccording to preliminary estimates, and preparing expert opinions; helping to find financing for economy, economic performance, Udmurtia is among the ten regions innovative projects. Source: Rosstat (2013-2018), Expert RA, PPP budget indicators and social indicators with the lowest administrative burden Development Centre, AIRR, RIA Rating, a report by the Presidential Commissioner for Entrepreneurs' Rights 35 TRANSPORT INFRASTRUCTURE IN UDMURTIA 34 LARGE RUSSIAN CITIES CLOSEST POPULATION, THE CONSUMER MARKET AROUND UDMURTIA TO UDMURTIA MILLION PEOPLE Moscow 12.6 IS RUB 2.24 TRILLION Ekaterinburg 1.4 Nizhny Novgorod 1.3

MADE IN UDMURTIA Kazan 1.2 MADE IN UDMURTIA

Chelyabinsk 1.2

Samara 1.2

Ufa 1.1 MOSCOW Moscow Perm 1.1 Nizhniy Novgorod 2 hours Kazan 17 hours Tumen WITHIN 600 KM WITHIN 1000 KM FROM IZHEVSK FROM IZHEVSK 18 hours — 1,200 km Perm PERM Voronezh Izhevsk Ekaterinburg 7 hours NIZHNIY NOVGOROD 4 hours — 290 km 44 MILLION 88 MILLION Samara permanent residents permanent residents Ufa 14 hours Volgograd Chelyabinsk 10.5 hours — 780 km EKATERINBURG 11 hours 7 CITIES 10 CITIES cities with a million-plus cities with a million-plus KAZAN 8 hours — 640 km population population

5 hours 5.5 hours — 390 km UFA RUB 904BN RUB 2.24TN 5 hours — 340 km per month spent by the local per month spent by the local SAMARA population on consumer goods population on consumer goods and services and services 23 hours CHELYABINSK

8 hours — 560 km 11 hours — 740 km

Source: Rosstat (2017), Russian Railways, Google Maps, 25 0 25 50 75 100 km 37 TRANSPORT INFRASTRUCTURE IN UDMURTIA 36

THE TRANSPORT INFRASTRUCTURE IN UDMURTIA KIROV OBLAST OFFERS SIGNIFICANT ADVANTAGES TO INVESTORS GLAZOV

Road repairs: to the border with Kirov MADE IN UDMURTIA BALEZINO MADE IN UDMURTIA Izhevsk Federal Airport can land Embraer, Sukhoi Superjet The region has direct access to the Trans-Siberian Railway, Oblast 11.5 km 100, Airbus A-319, Airbus A-320, Airbus А-321 and all lighter with a large railway hub in Glazov. In 2017, a total of aircraft. Passenger traffic in 2018: 352,000 passengers; 2,098,000 tonnes of goods were shipped by rail. cargo traffic: 885 tonnes. Balezino Station renovation Major transport corridors connect Udmurtia to The region’s river routes are 180 km long, enabling access neighbouring regions: to the Baltic Sea, the Black Sea and the Caspian Sea via the Kambarka Cargo Port. The port facilitates shipments Izhevsk Airport ━━ The P242 Perm-Ekaterinburg federal highway connects Udmurtia to the Urals. to Turkey, Romania, Bulgaria and further to Central and renovation Western Europe. Total volume of cargo shipped in 2017: PERM ━━ The P320 Elabuga-Izhevsk regional highway connects 373,000 tonnes. KRAI Izhevsk to other large cities in the Volga Region via Mozhga the M7 Volga Federal Highway, which is part of the Construction European E22 route. of a transport interchange hub PROJECTS IN UDMURTIA TO DEVELOP AND MODERNISE THE IZHEVSK AIRPORT PASSENGER THROUGHPUT CAPACITY, TRANSPORT INFRASTRUCTURE ARE IMPROVING THE REGION’S THOUSAND PEOPLE ACCESSIBILITY 352 VOTKINSK 316 The airport is undergoing a major overhaul to be able to 255 257 land new types of aircraft (Boeing) 241 By 2024, the Izhevsk Airport will have been renovated, including the runway, and a new terminal will have been IZHEVSK built. The federal budget allocated RUB 3.4 billion to renovate the airport.

By 2021, 35 km of roads will have been built and renovated including reconstruction of the highway to Kirov Oblast (to be completed in 2020). Total funds: RUB 252m 2014 2015 2016 2017 2018

By 2020, the city of Mozhga will see a new transport MOZHGA interchange hub that will link the existing railway station to the bus hub, enhancing the region’s transport accessibility and commuting possibilities. Investment: RUB 300m with major highways SARAPUL co-financing from the regional budget and OAO RZD railways By 2024, the Balezino Station will have been renovated KAMBARKA (Trans-Siberian Railway Network), improving throughput river port capacity by 50%. Total investment: RUB 4bn including OAO RZD funds

Source: Rosstat (2017), RZD (2018), the Ministry of Transport of the Udmurt Republic, PwC analytics TATARSTAN BASHKORTOSTAN 39 HUMAN CAPITAL 38 UDMURTIA’S HIGHLY EDUCATED POPULATION AND 16 UNIVERSITIES ... OF INVESTMENT PROJECTS. A MAJORITY (67%) OF UNIVERSITY ARE AN EXCELLENT RESOURCE SUPPORTING THE DELIVERY... GRADUATES STAY TO WORK IN THE REGION MADE IN UDMURTIA MADE IN UDMURTIA KEY EDUCATION AND SCIENCE INDICATORS KEY HUMAN CAPITAL INDICATORS

Higher education institutions in Udmur- Students per 1,000 residents Employment rate LEADER Specialists involved in R&D tia, including 9 university branches, offer (29 in Russia on average) (65.5% in Russia on average) AMONG PEER per 1,000 employees 16 education programmes and training 30 67% REGIONS** 3 (10 in Russia on average) (incl. 9 university branches)

Distribution of university students across fields of study Distribution of employed individuals across economic sectors

10 % 5 % 2 % 12 % 1 % 4 % Humanities Healthcare and medical 15 % Education Agriculture, forestry, hunting sciences Arts and culture 5 % Healthcare and social services Mining and extraction Agriculture and agricultural Mathematics and natural sciences 10 % Public administration Manufacturing sciences 20,544* Engineering, technology and Transportation and storage Construction 28 % FULL-TIME Social sciences industrial sciences STUDENTS Culture, sports and leisure Wholesale and retail 9 % 36 % Education and pedagogy 26 % Professional, scientific Other and technical activities 7 % 8 % 2 % 8 % 3 % 7 % 4 % Source: Udmurtstat (2018)

graduates from Udmurt TOP THREE of regional university graduates of mining, manufacturing and Share of innovative goods, work universities are employed within AMONG PEER stay to work in Udmurtia energy companies in Udmurtia and services among all goods, 85% one year upon graduation REGIONS** 67% 12 % are engaged in innovation 18% work and services in Udmurtia (11.5 % in Russia on average) (in the mining, manufacturing and energy industries) * Students from state universities ** Peer regions are the following 15 regions: Irkutsk Region, Astrakhan Region, Republic of Tatarstan, Orenburg Region, Perm Territory, (8 % in Russia on average) Samara Region, Lipetsk Region, Voronezh Region, Kaliningrad Region, Volgograd Region, Saratov Region, Tver Region, Leningrad Region, Rostov Region and Republic of Bashkortostan

Source: Main Information and Computer Centre (GIVTs), Higher Education Monitoring, 2018, Ministry of Education and Science of the Udmurt Republic, 2018 Source: National Research University Higher School of Economics, innovation indicators, 2016 41 INVESTMENT PLATFORMS AND INDUSTRIAL PARKS 40 INVESTMENT PLATFORMS IN UDMURTIA (1/3) PROPERTY

№ ADDRESS TYPE OF PROPERTY AREA ACCESS WAYS ELECTRICITY SUPPLY GAS SUPPLY WATER SUPPLY TYPE OF COST USE CASES OWNERSHIP

1 Izhevsk

№1 35 pereulok Incomplete public catering facility S (land area) — 4,996 m2 М-7 — 0.5 km 150 kW with capacity to Gas boiler house Central water supply Private Рublic catering and related services.  RUB 52m Shiroky increase up to 400 kW After reconstruction, the facility may be S (GBA) — 2,860 m2 Stn. Izhevsk — 7 km re-equipped as an office building

№2 8 ulitsa Property portfolio (5 items) S (land area) — 50,000 m2 М-7 — 2 km Central water supply Private Any production activity  2 MW Capability to connect to networks / * Promyshlennaya (gas pipeline across the plot) S (GBA) — 61,100 m2 Stn. Izhevsk — 7 km

№3 101 ulitsa Lenina Property portfolio (113 items) S (land area) — 150,000 m2 М-7 — 3.5 km Gas pipeline will be extended to Central water supply Private Any production activity  5 MW / * the borders of the plot by end 2019 and on-site wells S (GBA) — 100,000 m2 Stn. Izhevsk — 10 km

№4 77 ulitsa Poyma Property portfolio (15 items) S (land area) — 100,000 m2 М-7 — 2.5 km Central water supply Private Any production activity  2 MW Capability to connect to networks RUB 120m 1 overhead crane S (GBA) — 15,000 m2 Stn. Izhevsk — 5 km (gas pipeline across the plot)

№5 5 ulitsa Property portfolio (2 items) S (land area) — 33,231 m2 М-7 — 7 km Private Any production activity, metalwork  Capability to connect Capability to connect to Avtozavod’s Capability to connect / * Avtozavodskaya 9 overhead cranes networks S (production shop) — 12,000 m2 Stn. Izhevsk — 15 km 300 m 300 m S (office building) — 3,000 m2 300 m

М-7 — 18 km №6 170 Votkinskoye Building (non-residential, 1 floor) S (land area) — 20,789 m2  300 kW, capability to Capability to connect Capability to connect to central Private 12,000 RUB/m2 Any production activity, logistics shosse 6 overhead cranes Stn. Izhevsk — 15 km increase capacity water supply networks S (GBA) — 12,000 m2 200 RUB/m2

М-7 — 0.5 km №7 13 ulitsa Print shop building (office, commercial building) S (land area) — 9,034 m2  80 kW The facility is connected to city heat Central water supply Municipal / Office, commercial, IT park Pastukhova supply networks (land area) S (GBA) — 3,000 m2 Stn. Izhevsk — 6 km RUB 17.8m*

(GBA) RUB 12.1m*

М-7 — 5 km №8 22 ulitsa Health centre building S (land area) — 3,533 m2  301 kW The facility is connected to city heat 315 m3/day Municipal RUB 31m Office, hotel, health centre Ukhtomskogo S (GBA) — 3,115 m2 Stn. Izhevsk — 15 km supply networks Capability to connect 400 m

М-7 — 5 km №9 26 ulitsa Health centre building S (land area) — 7,842 m2  301 kW The facility is connected to city heat 315 m3/day Municipal RUB 40m Office, hotel, health centre Ukhtomskogo supply networks S (GBA) — 3,036 m2 Stn. Izhevsk — 15 km Capability to connect 300 m

Sale Lease Cadastral value of the land plot Capability to connect SUPPORT –– The regional administration will provide assistance –– Reduced-rate lending from the Udmurtia Fund for in preparing the full package of documents for Entrepreneurship Development (№2–9) Capacity Capacity range Distance to connection point The site is connected commissioning (№1, 10) MEASURES –– PSEDA (№11–16, 18–21) * Upon the investor’s request, a valuation can be conducted on the asset. 42 INVESTMENT PLATFORMS AND INDUSTRIAL PARKS 43 INVESTMENT PLATFORMS IN UDMURTIA (2/3) PROPERTY

№ ADDRESS TYPE OF PROPERTY AREA ACCESS WAYS ELECTRICITY SUPPLY GAS SUPPLY WATER SUPPLY TYPE OF COST USE CASES OWNERSHIP

2 Sarapul

М-7 — 55 km №10 5 A ulitsa Building (residential, 2 floors) S (land area) — 2,125 m2  Capability to connect Capability to connect Capability to connect to water Municipal RUB 5.3m* After the facility is reclassified Krasnaya The building is a cultural heritage site supply networks as non-residential, it can be used for S (GBA) — 493.6 m2 Stn. Sarapul — 5 km  100 kW  50 m3/hour ploshchad  commercial purposes 200 m 700 m  15,000 m3/day 55 m Сapability to connect to water disposal networks

  8,000 m3/hour 20 m

М-7 — 55 km Capability to install №11 49 ulitsa Truda Administrative and service building S (land area) — 52,001 m2  Capability to connect Capability to connect to water Private RUB 10.1m* Any production activity, woodworking a substation and connect (a five-floor administrative building S (structures) — 12,053.3 m2 Stn. Sarapul — 6 km 300 m supply networks it to 6 kW cable and a three-floor production facility) 5 m 10 m

М-7 — 55 km №12 49 ulitsa Truda Building (non-residential, three floors, S (land area) — 9,238 m2  The site is connected Capability to connect The site is connected Private RUB 4.4m* Any production activity production facility) Stn. Sarapul — 6 km S (GBA) — 11,638 m2  150 kW 200 m  30 m3/day

М-7 — 55 km №13 40 ulitsa Building (non-residential, 3 floors) S (land area) — 4,962 m2  up to 1,000 kVA Capability to connect Water supply Private RUB 2.6m* Any production activity Gogolya, S (GBA) — 1,452.7 m2 Stn. Sarapul — 6 km 50 m 100 m building 7 TP-3 with a capacity of Water drainage 2*1,000 kVA 100 m

М-7 — 54 km №14 15 ulitsa Building (non-residential, 2 floors) S (land area) — 3,500 m2  Capability to connect Capability to connect Capability to connect to water Private RUB 2.2m* Any production activity Elektrozavod- supply networks S (GBA) — 5,543 m2 Stn. Sarapul — 3 km 1.5 MW 300 m skaya TP-21: 30 15 m Capability to connect to water TP-22: 80 m disposal networks 10 m

№15 30 BB ulitsa Building (non-residential, 8 floors) S (land area) — 2,519 m2 М-7 — 55 km Capability to connect Capability to connect Capability to connect to water Private / * Any production activity Industrialnaya supply networks S (GBA) — 9,417.7 m2 Stn. Sarapul — 6 km 1,136 kW 205.75 m3/hour  213 m3/day Capability to connect to water disposal networks

 109 m3/day

Sale Lease Cadastral value of the land plot Capability to connect SUPPORT –– The regional administration will provide assistance –– Reduced-rate lending from the Udmurtia Fund for in preparing the full package of documents for Entrepreneurship Development (№2–9) Capacity Capacity range Distance to connection point The site is connected commissioning (№1, 10) MEASURES –– PSEDA (№11–16, 18–21) * Upon the investor’s request, a valuation can be conducted on the asset. INVESTMENT PLATFORMS IN UDMURTIA INVESTMENT PLATFORMS AND INDUSTRIAL PARKS №21 №20 №19 №18 №17 №16 № MEASURES SUPPORT 4 3 Dragunova 69 ulitsa 7 ulitsaBelova ChMZ Site No 3, 7 ulitsaBelova ChMZ Site No 2, ulitsa Belova ChMZ Site No 1,7 Dekabristov 19 Aulitsa Goncharova 1A ulitsa Glazov Votkinsk ADDRESS – Group of buildings(9items) OAO Glazov.Elektron production site Pre-production site (17items) Detached structure Land plot with anuncladconcrete structure UAT landplot andproperty portfolio (22items) Building (non-residential, 1floor) Production property portfolio (48 items) TYPE OF PROPERTY TYPE – commissioning for documents of package full the preparing in assistance provide will administration regional The (№1, 10) (№1, S (structures) —10,000 m2 S (landarea) —21,839 m2 S (GBA) —16,768 m2 S (landarea) —44,618 m2 S (GBA) —18,025.9 m2 S (GBA) —11,880.2 m2 S (landarea) —54,679 m2 S (GBA) —7,000 m2 S (landarea) —40,576 m2 S (GBA) —23,633.6 m2 S (landarea) —108,018 m2 AREA (3/3) – – – – PSEDA Entrepreneurship Development (№2–9) for Fund Udmurtia the from lending Reduced-rate (№11–16, 18–21)

ACCESS WAYS Stn. Glazov —0.5km Stn. Glazov —0.1km Stn. Glazov —0.05km Stn. Glazov —0.5km Stn. Votkinsk —4km Stn. Sarapul —3km

 М-7 —78km  М-7 —83km  М-7 —83km  М-7 —83km  М-7 —60km  М-7 —54km ELECTRICITY SUPPLY ELECTRICITY

TP-1: 545m  1.8 MW plot  300 kW within the land ≈ 600 kVA Current utilisation 6/0.4 kV 2x320 kVA Transformers  Substation PS-14 2x630 kVA Transformers 6/0.4kV  Substation PS-13 38 MW ≈ 600 kVA Current utilisation 6/0.4 kV 2x320 kVA Transformers  Substation PS-14 2x630 kVA Transformers 6/0.4kV  Substation PS-13 235.05 kW TP-2: 300m

44 PROPERTY pon the investor’s request, a valuation canbeconducted on the asset. * GAS SUPPLY GAS U to connect to connect 250m Capability Capability 100 m3/hour 1.5 Gcal/hour Heat supply andhot water supply 80 Gcal/hour Heating supply 2 Gcal/hour Heat supply andhot water supply 51,400 m3/year Capacity Sale Capacity range Lease WATER SUPPLY   300m  60 m3/day supply networks  The site isconnected to water  Service drainag 100 m3/hour  Service drainage 20 m3/hour  Technical water130,000 m3/day 13,000 m3/day  Service anddrinking water Service drainage 80m3/hour Storm water drain 50m3/hour Technical water 15m3/hour 20 m3/hour  Service anddrinking water supply Compressed air 8m3/hour 27 m3/day the premises drainage pumpingstationon  Drainage 30m3/day Water supply 30m3/day Distance to connection point Cadastral value of the landplot Blind (VOS) ofAssociation the All Russia Private Private Private Private Federal OWNERSHIP OF TYPE Capabilityconnect to The site isconnected

COST

RUB 300/m² RUB 19.75m RUB 49.32m RUB 19.26m* RUB 59.4m* 60 RUB/m² production Any production activity except food production Any production activity except food production Any production activity except food production Any production activity except food Any production activity, logistics structures’ production Any production activity, reinforced concrete USE CASES USE CASES

45 INVESTMENT PLATFORMS IN UDMURTIA INVESTMENT PLATFORMS AND INDUSTRIAL PARKS №28 №27 №26 №25 №22 №24 №23 № CATEGORY LAND 3 2 1 Izhevsk 160 ulitsaPugacheva 1 ulitsaLeningradskaya ulitsa Azina 177p formation) (plot in the process of ulitsa Industrialnaya Galyansky Trakt Obyezdnaya and Intersection of Votkinsk Sarapul 11 ulitsa Teplichnaya11 198 ulitsaKambarskaya ADDRESS – – – – Settlement lands(№23–30) 31–33) communications andother specialpurposes (№22, Land for production, energy industry, transport,

2.6 5.24 1.1 6.7 30 7 9.8 AREA, HA

ACCESS WAYS Stn. Votkinsk —4km Stn. Sarapul —5km Stn. Sarapul —4km Stn. Sarapul —7km Stn. Izhevsk —18 km Stn. Izhevsk — 15 km Stn. Izhevsk —27 km

 М-7 —62km  М-7 —62km  М-7 —57km  М-7 —62km  М-7 — 9km  М-7 — 6km  М-7 — 25km houses or parts thereof andother similar products equipment, liftsandhoists,carpenter products, pre-fabricated materials), service andconstruction gasandplumbing construction materials (brick,sawed timber, concrete, fixture Deployment of capitalconstruction production facilities: For deployment of industrialfacilities For deployment of anindustrialfacility and businessbuildings For deployment of production andutility facilities andpublic business buildingsandutility infrastructure servicing the zone. Production andutility infrastructure zone for publicand Crop farming. For deployment of anagribusinesspark centre For deployment of publicandbusinessfacilities, shopping For publicandbusinessfacilities. For deployment of anindustrialfacility, warehouses Land for multifunctional publicandbusinessfacilities. PERMITTED USE TYPE USE PERMITTED (1/2) MEASURES SUPPORT – – – – (№26, 28, 29, 33) For 29, 28, lease without bidding(№26, For lease 27,without bidding.PSEDA (№25, 30) 6 kW cable substation andconnect it to Capability to installa the border of the plot received, networks goalong Technical specificationsnot ELECTRICITY SUPPLY ELECTRICITY to connect to connect (KTP-19) ≈120m 10m 300m  50m  Capability Capability 100 kW 100 kW 150 kW 1 MW on the plot 2 MW onsite

46 pon the investor’s request, a valuation canbeconducted on the asset. * LAND PLOTS LAND networks goalong the border of the plot Technical specificationsnot received, networks goalong the border of the plot Technical specificationsnot received, GAS SUPPLY GAS U to connect to connect to connect 300 m  100m  50m  Capability Capability Capability 300 m3/hour 100 m3/hour 20 m3/hour 2,000 m3/hour onsite Capacity Sale Capacity range Lease the border of the plot Technical specificationsnot received, networks goalong the border of the plot Technical specificationsnot received, networks goalong Water-bearing layer depth: 30m Capability to drilla well to facilitate onsite operations. WATER SUPPLY to connect to connect to water disposal to connect to water supply to connect to water disposalprovided adrainage to connect to water supply  70m  160m  51m  55m  Capability Capability Capability pumping stationisbuilt Capability Capability (sewage treatment facilities) 69.92 m3/hour Sewage treatment facilities’ inlet chamber —5,000m  HC-2 step-up: 346.78m3/hour Main water supply pipeline 4,200 m3/day 2,500 m3/day 2,500 m3/day 2,500 m3/day 2,500 m3/day Distance to connection point Cadastral value of the landplot Capabilityconnect to The site isconnected federal properties Non-delineated Private Private Private Municipal Municipal Private TYPE OF OWNERSHIP OF TYPE an agribusiness park Search for aninvestor to build COST RUB8.1m* RUB17.8m* / RUB7.9m* / RUB32.0m* / RUB 262.1m RUB 5mper hectare

47 INVESTMENT PLATFORMS IN UDMURTIA INVESTMENT PLATFORMS AND INDUSTRIAL PARKS №32 №33 №31 №30 №29 № CATEGORY LAND 4 6 5 Zavyalovsky Area Zavyalovsky Area MO Gornakskoye village of Chumoitlo, 900 m west of the Zavyalovsky Area ulitsa Kuibysheva pereulok Gvardeisky/ 14 ulitsaPromshlennaya Mozhginsky District Glazov ADDRESS – – – – Settlement lands(№23–30) 31–33) communications andother specialpurposes (№22, Land for production, energy industry, transport, 8 71.3 2.7 7.6 1.425 AREA, HA

ACCESS WAYS Stn. Izhevsk — 26 km Stn. Izhevsk — Stn. Izhevsk — 26 Stn. Izhevskkm — Stn. Glazov —5km Stn. Glazov —5km

Stn. Mozhga — 7km  М-7 — 27km  М-7 —27km  М-7 —80km  М-7 —80km nearМ-7 the deployment of anindustrialfacility, warehouses, car dealership Land for multifunctional publicandbusinessfacilities. For For deployment of industrialfacilities For deployment of anindustrialfacility, warehouses support, production support,communications. goods industry, construction industry, warehouses, agriculture to business administration, car service, subsoiluse,consumer Food production, option to change the type of permitted use car dealership For deployment of anindustrialfacility, warehouses, Land for multifunctional publicandbusinessfacilities. For deployment of anindustrialfacility To buildclassIV-V hazard industrialfacilities. PERMITTED USE TYPE USE PERMITTED (2/2) MEASURES SUPPORT – – – – (№26, 28, 29, 33) For 29, 28, lease without bidding(№26, For lease 27,without bidding.PSEDA (№25, 30) onsite operations a gas generator to facilitate None Capability to install onsite operations a gas generator to facilitate None Capability to install ELECTRICITY SUPPLY ELECTRICITY (STP-268) ≈400m 300m  52 kW  4.5 MW onsite

48 pon the investor’s request, a valuation canbeconducted on the asset. * LAND PLOTS LAND GAS SUPPLY GAS U 150 m 500 m 1,000 m3/day  1,000 m3/hour onsite  1,000 m3/hour onsite Capacity Sale Capacity range Lease Water-bearing layer depth: 30m Capability to drilla well to facilitate onsite operations. Water-bearing layer depth: 30m Capability to drilla well to facilitate onsite operations. WATER SUPPLY 0.25 km 0.1km 1,500m 1,500m  6,000 m3/year Water drainage Water supply Water drainage Main water supply pipeline Distance to connection point Cadastral value of the landplot Capabilityconnect to The site isconnected Municipal Municipal Municipal Private Private TYPE OF OWNERSHIP OF TYPE COST RUB137.6m* RUB67.0m* RUB14.1m* RUB 5mper hectare RUB 5mper hectare

49 INDUSTRIAL PARKS IN UDMURTIA IN PARKS INDUSTRIAL INVESTMENT PLATFORMS AND INDUSTRIAL PARKS 3 2 1 Distance to the nearest international airport,km Distance to the nearest railway discharge terminal, km Name of the nearest discharge terminal On-site railway tracks in the park Railway connection Length of road network in the park,km Nearest motor road, distance, km Nearest road, name Distance to the nearest federal highway, km Transport accessibility removal facilities, security, legal,consulting, IT, cleaningof grounds andgarbage Logistics, recruitment, maintenance andoperation of common use Additional services of the managementcompany Provision of specialised equipment Construction of turn-key industrialbuildings Lease of production facilities Lease of landplots Sale of landplots Basic information Focus Website Management company Address 220 0.2 Industrial park 2.5 0.01 Deryabin Proezd 2 Processing industry www.паркразвитие.рф www.most-dvlp.ru OOO Izhevsk PlantRazvitie Deryabin Proezd, Izhevsk IZHEVSK PLANT IZHEVSK 8 Izhevsk Station 3.5 0 Votkinskoye Highway 0.03 https://инметаллпарк.рф www.most-dvlp.ru, Izhevsk 298 VotkinskoyeHighway, METALLURGIC

equipment heavy-duty crane CNC machinesand  8 Izhevsk Station 2 0.15 Novoazhimova Street 2 nashi-obekty/synergy/ https://most-dvlp.ru/ Izhevsk 27 Novoazhimova Street, Industrial andlogisticscentre SYNERGY

50 8 4 6 5 7 CONTACT PERSON CONTACT Tariff for residents, RUB/kWh Available capacity, MW Electricity Resources Total office floor size for placement of residents,sqm Existing production facilities designated for placement of residents, sqm Real estate (Industrial, Office) Number of jobs crated in the park,units Total investments of parkresidents, RUB Total investments inparkinfrastructure, RUB Investments andresidents Availability of transport connection from residential areas to the park Accessibility for employees Communications ( Water disposal in the parkandstorm sewage treatment facilities Water supply Heat supply Gas supply Permitted hazardous facility class Total territory in the park,hectares Park infrastructure, landplot telephone andfibre optic Internet ) Radygina Svetlana Vladimirovna 4.74 20 32,400 260,420 788 121.84 632.5 Class II 76.90 IZHEVSK PLANT IZHEVSK

permanent public transport routes M T 4.74 4 1,098 50,110 168 23.42 184.49 Class III-V 52.10 METALLURGIC +7 (922)692-03-89 +7 (3412)911-969 1,700 18,020 13 12.04 315.88 Class II 14.40 4.74 6 SYNERGY E [email protected]

51 52 INFORMATION ON AVAILABLE AGRICULTURAL LAND LEASE 53 Land plots are leased out for 49 years without bidding, 19 provided that an investment project will be implemented YARSKY there. MADE IN UDMURTIA MADE IN UDMURTIA SALE 34 HA HA 91,100 100 11,800 ━━ After three years of YUKAMENSKY lease, a land plot may available agricultural land covers land plots that have already been total area that have already been be purchased without assigned cadastral numbers assigned cadastral numbers bidding at its cadastral value.

━━ For farming purposes, land DISTRICT NUMBER OF AGRI- TOTAL AREA OF MINIMUM AND MAXIMUM AVERAGE COST OF MINIMUM AND MAXIMUM plots are provided without CULTURAL LAND LAND PLOTS AREA OF LAND PLOTS ANNUAL LAND PLOT COST OF ANNUAL bidding, provided that the 8 PLOTS (WITH AS- AVAILABLE FOR AVAILABLE FOR SALE/ LEASE (WITHOUT LEASES ON LAND PLOTS lessee has published the SIGNED CADASTRAL SALE/LEASE, HA LEASE, HA* BIDDING), RUB* AVAILABLE FOR SALE/ project and is participating SELTINSKY NUMBERS) LEASE, RUB in a regional state programme. Kiyasovsky 16 3,632.2 12 848 13,561.9 640 45,235 ━━ In other cases, there is an 7 auction with the starting price determined based UVINSKY Mozhginsky 2 391.0 72 319 12,424.8 4,571 20,278 on appraisal results. IZHEVSK Sarapulsky 13 1,333.4 6 356 13,642.8 935 66,372

Seltinsky 8 169.8 8 37 682.1 171 1,237 2 13 Uvinsky 7 115.1 6 43 637.4 241 1,738 MOZHGINSKY SARAPULSKY 16 Yukamensky 34 5,375.6 2 1317 10,087.1 152 71,798 KIYASOVSKY Yarsky 19 782.0 0.2 512 2,360.2 11 29,332

Minimum Maximum

*0.4% of the cadastral value (rate for agricultural land established by Udmurt Republic Government Resolution No. 172 of 6 November 2007) 55 MADE IN UDMURTIA

APPENDIX 1: SUCCESS STORIES IN UDMURTIA 57 SUCCESS STORIES IN UDMURTIA 56 PROMISING AREAS Goal: increase the share of civilian-use goods and 1.3 Manufacturing of complex geometric AO KALASHNIKOV CONCERN OF DEVELOPMENT services in total revenues to 30% parts using MIM technology 1. Kalashnikov Engineering* products 1.4 Forgings 1.1 Machine tool building: 1.5 Precision casting: steel, special alloys, grey pig iron and Ni-resist 1.1.1 CNC lathe mills Tool-making facilities 1.1.2 Screw-cutting lathes IZh 250ITVM 1.6

MADE IN UDMURTIA IT products for production digitalisation MADE IN UDMURTIA 1.1.3 CNC turning mills 1.7 (in-house developed MES, SCADA, PLM) 1.1.4 Hybrid welding and milling machining centres (combination of additive technologies and mechanical metal-working) 2. Kalashnikov Engineering* services: DMITRY TARASOV 1.1.5 Special metal working machines and 2.1 Process Laboratory Training Centre(staff The Izhevsk Mechanical Plant was founded in 1807 in a decree issued YEAR OF Kalashnikov Managing Director technological equipment built to customer’s training and implementation of global ESTABLISHMENT by Alexander I. AO Kalashnikov Concern specifications best practices in production and business systems) The Izmash Production Association was set up in 1975. 1.1.6 Rolling screws and nuts AO NPO Izhmash was renamed as AO Kalashnikov Concern in 2013. (ball-and-screw units) 2.2 Kalashnikov Development (civil engineering services) 1.1.7 Gear production machinery CORE PRODUCTS 1. Civilian-use small weapons (sports and hunting weapons, tactical weapons, Engineering Centre (enterprise 1.2 SERVICE 360 contract (a production service 2.3 signal guns, air guns, dummy guns, non-lethal weapons and replica weapons) mix representing an efficient approach to business modernisation, development and operating efficiency improvement services) 2. Military-use products (fire arms, high-precision munition and special-pur- “OVER THE PAST FIVE YEARS, management and enabling a considerable pose armour, assault boats, naval boats) WE HAVE MADE A GREAT LEAP reduction of production losses along with 2.4 Technological equipment and spindle 3. Unmanned aerial vehicles (copters and planes) FORWARD IN PRODUCING improvement of the enterprise performance) assembly repair and maintenance 4. Shipbuilding (civilian multifunctional and commercial boats, civilian ships, CIVILIAN-USE PRODUCTS. IN ━ Participation in programmes operated by the Industrial Development Fund aimed compound civilian boats, patrol crafts, guided missile boats, speedboats 2018, YEAR-ON-YEAR REVENUE STATE SUPPORT ━ at manufacturing high-tech civilian- and double-purpose products and assault boats) FROM CIVILIAN-USE PRODUCTS EXPERIENCE ━ Cooperated with the Russian Ministry of Industry and Trade in regard to Russian Government 5. Clothing and accessories INCREASED THREEFOLD. ━ Resolution No. 1312 of 30 December 2013 “On Approving the Rules of Granting Subsidies from 6. Electric transport We are recognised as a the Federal Budget to Russian Entities to Reimburse a Share of R&D Costs in Priority Fields Russian leader in the digital- of Civil Industry as Part of Implementing Comprehensive Investment Projects by Such Entities” KEY ━━ Strong brand isation of manufacturing. At (as amended and revised) Kalashnikov, we have built COMPETI- ━━ Continuous implementation of R&D and advanced technologies to enhance IVENESS the product line an IT ecosystem that serves DRIVERS as a model for other Russian ━━ Manufacturing of a wide range of high-demand and competitive products manufacturing enterprises ━━ Extensive experience in the industry and highly qualified engineers The regional administration ━━ One of shareholders of AO Kalashnikov Concern is Rostec State Corporation provides key assistance in (25%), which incudes more than 700 entities that work to unleash Russia’s engaging with development technological and scientific potential institutes.” *Kalashnikov Engineering is a brand of Kalashnikov Concern, which develops products and provides services for the civilian sector 59 SUCCESS STORIES IN UDMURTIA 58 ANDREY SHUTOV ━ KOMOS comprises 17 companies in Udmurtia, KEY ━ Managing Shareholder OOO KOMOS GROUP COMPETITIVENESS Tatarstan, Perm and Bashkortostan. OOO KOMOS GROUP DRIVERS ━━ KOMOS operates branded retail outlets and KOMOS- Logistika transportation company, which delivers the holding’s products across Russia.

━━ KOMOS collaborates with the Selo Zelenoe chain (the brand’s projected sales for 2019 will be RUB 10bn). MADE IN UDMURTIA

STATE SUPPORT ━━ In 2018, the Foundation for the Development of “TODAY, GOODS UNDER OUR SELO EXPERIENCE Single-Industry Cities approved the application of the Udmurt Republic in relation to the investment project ZELENOE, MOLOCHNAYA RECHKA, “Reconstruction of Sarapul Meat-Processing Plant TOPTYZHKA, TOBE AND OTHER of OOO Vostochny of KOMOS GROUP agricultural BRANDS ARE SOLD ACROSS A VARIETY OF NATIONAL AND LOCAL CHAINS YEAR OF 2003 holding”. As part of the investment project, several ESTABLISHMENT shops have been repaired, new production equipment IN RUSSIA AND NEIGHBOURING has been launched and infrastructure is being COUNTRIES. WE HAVE STARTED TO developed. Completing the project will enhance EXPORT OUR PRODUCTS TO CHINA. CORE ACTIVITIES ━━ Milk processing (2nd largest Russian producer of UTH milk) production volumes and create 100 new jobs. Udmurtia has become part of ━━ Poultry farming (5th in egg production) the global world. This is not just a ━━ Pig-breeding and meat processing (23rd in pork production) SALES GEOGRAPHY ━━ KOMOS delivers products to 72 Russian regions. slogan. The regional administration ━━ Meat processing ━━ In April 2019, Sarapul-Moloko shipped the first batch has taken important measures of dairy products to China as part of an international to promote products made in ━━ Crop and dairy farming contract signed in March between the agricultural Udmurtia. We highly appreciate ━━ Animal feed production holding and Li Hua Economic and Co.Ltd.Suifenhe the efforts of the regional ━━ Fish processing (Suifenhe, People’s Republic of China). The expected administration to enhance the trade volume will be at least 500 tonnes of dairy investment appeal of our territory PRODUCTION ━━ The strategic goal of KOMOS GROUP is to become the leading milk processing company in products and 40 tonnes of ice cream per month. and support local producers. All MODERNISATION AND Russia by reaching processing volumes of 1 million tonnes. For this purpose the agricultural of this helps to promote a positive DEVELOPMENT holding is conducting large scale reconstruction projects on a regular basis. In particular, image of Udmurtia.” the holding is currently implementing the MILKOM 2020 investment project, which is aimed at modernising production facilities and adopting modern technology for waste water processing at the Kezskiy Cheese Factory.

━━ In the near future, the Ministry of Agriculture and Food of the Udmurt Republic and OAO MILKOM plan to sign a special investment contract that will facilitate the project, provided that OAO MIKOM receives tax benefits. Total investments to reconstruct the Kezskiy Cheese Factory will exceed RUB 2bn.

━━ From 2005 to 2018, the holding invested RUB 23.3bn in the agribusiness sector in Udmurtia, Tatarstan and Perm. 61 SUCCESS STORIES IN UDMURTIA 60 KEY ━━ Modern automatic equipment from Germany, Italy, Japan, Turkey and Switzerland and OOO IZHEVSK HEATING EQUIPMENT FACTORY COMPETITIVENESS sufficient material and technical resources DRIVERS ━━ Highly trained and skilled personnel ━━ Wide range of high-quality products ━━ Internal network of authorised service centres ━━ High quality standards MADE IN UDMURTIA MADE IN UDMURTIA ━━ Collaboration with leading Russian and European universities, laboratories and institutes

KEY ACCOUNTS ━━ Ballu VASILY PERMYAKOV ━━ Zanussi YEAR OF 2007 Director ESTABLISHMENT Izhevsk Heating Equipment Factory ━━ Electrolux ━━ ZUBR CORE ACTIVITIES Thermal equipment: ━━ Interskol AND PRODUCTS ━━ Heat guns, thermal curtains ━━ Russian Railways (RZD) ━━ Infrared electric and gas heaters, electric convectors ━━ Moscow Metro ━━ gas lamps with an electronic control unit, water fan heaters ━━ Sberbank

THE FACTORY’S ━━ In 2008, an assembly site was launched at NPP Kupol. SALES MARKETS ━━ Russia and CIS MILESTONES ━ In 2011, the factory moved to new production facilities. The ━ ━ Norway factory launched the following: mechanical metal-working, press- ━ forming, powder painting and assembling conveyors. The factory “UDMURTIA IS A LONG ESTABLISHED ━━ Finland introduced the Lean Production Programme. INDUSTRIAL REGION WITH PRODUCTION ━━ Sweden ━ In 2014, the factory opened production facilities in Kirzhach, EXPERTISE, STRONG COLLABORATIONS ━ ━━ Holland Vladimir Region. CE certified. A belt conveyor, bending machine, AND HIGH LEVELS OF HUMAN CAPITAL. ━━ England laser machine and profiling line are in place. In combination with state support, all of these factors create excellent ━━ France ━━ In 2015, the factory obtained a Quality Management System certificate in accordance with ISO 9001 standards. conditions to develop existing ━━ Poland production facilities and attract new investment.” 62 SUCCESS STORIES IN UDMURTIA ALEKSANDR SHTUMF 63 ━ In 2013-2016, the company received subsidies from the STATE SUPPORT ━ Director OOO ORION EXPERIENCE regional and federal budgets. OOO ORION ━━ The company received a reduced-rate forest resource lease under a forest development priority investment project (“Technical re-equipment of veneer and sawmilling production, forest harvesting operations set-up”) in 2015.

━━ The company raised funds via the Industry Development Fund MADE IN UDMURTIA MADE IN UDMURTIA for an investment project (“11-section veneer roller dryer with automated independent temperature control for each gas burner, veneer hot presses and compactors”) in 2017. 2010 YEAR OF ━━ The company received a 106.6m loan against a guarantee “STATE SUPPORT RECEIVED AT ESTABLISHMENT issued by the SME Corporation under Programme 6.5 to carry THE REGIONAL LEVEL FROM THE out modernisation and purchase raw materials. GUARANTEE FUND GAVE THE COMPANY ━━ In 2005, the company sold veneer stock and fire wood to a forest combine COMPANY ADDITIONAL RESOURCES ━ Russian Federation ━ Finland MILESTONES ━━ In 2010, the company bought equipment from Uvadrev Holding and started lato-flex SALES GEOGRAPHY ━ ━ TO DEVELOP NEW LINES OF production ━━ Azerbaijan ━━ Czech Republic BUSINESS AND ENTER NEW DISTRIBUTION MARKETS.” ━━ In 2012, the company started producing veneers of various thickness ━━ Italy ━━ Germany ━━ In 2018, an up-to-date high-output sawmilling line was launched ━━ Egypt ━━ Canada ━━ Estonia CORE PRODUCTS ━━ Birch veneer products including veneer, caul, panels

PROMISING AREAS OF ━━ Wood trim from soft and hard wood including floor and roofing board, rectangular timber, DEVELOPMENT weatherboard, casing molding

KEY ━━ Using cutting-edge, energy-efficient wood processing equipment made in Taiwan, Finland COMPETITIVENESS and Brazil DRIVERS ━━ Efficient use of state support 65 SUCCESS STORIES IN UDMURTIA 64 HIGH-POTENTIAL ━━ Energy efficient gas-fired radiant heating systems GOODS AND ━━ Turn-key industrial waste water treatment solutions (galvanics) AO IEMZ KUPOL SERVICES ━━ Solid state wave gyroscopes (IZHEVSK ELECTROMECHANICAL PLANT) ━━ Two-component solutions for peritoneal dialysis

KEY DRIVERS OF ━ Project management principles ALEKSEI ZLOBIN ━

COMPETITIVE POWER MADE IN UDMURTIA YEAR OF 1957 Manufacturing and Technical ━━ Successful experience in production conversion, diversification, technology development ESTABLISHMENT Products Director ━ Organisation of joint projects with foreign partners (a joint venture with FRESENIUS MEDICAL AO IEMZ KUPOL ━ CARE Deutschland GmbH) KEY STAGES ━━ In 1997, the first fan heater was manufactured laying the foundations for a fully fledged climate control equipment production line OF CIVILIAN- STATE SUPPORT ━━ Industrial Development Fund: funding finned pipe rolling-on production (ongoing approval USE PRODUCT ━━ In the 1990s-early 2000s, as part of the Conversion Programme, EXPERIENCE procedure) MANUFACTURING a pharaceutical manufacturer (Rester) and civilian-use products ━━ Russian Ministry of Industry and Commerce: subsidised interest rates manufacturing plant (TNP Meteor) were built

━━ In 2008, Rester worked with FRESENIUS MEDICAL CARE Deutschland SALES GEOGRAPHY ━━ Russian Federation GmbH to launch the production of solutions for peritoneal dialysis; the ━━ Belarus, Turkey, Bangladesh, indirect exports to India opening ceremony was attended by Walter Jürgen Schmid, the German “WE FEEL SUPPORTED BY THE ━ Korea, China Ambassador to Russia GOVERNOR AND REGIONAL ━ ADMINISTRATION AND THE MAIN CIVILIAN-USE Climate control equipment: Machinery and energy and utilities ALMAZ-ANTEY CONCERN. products: We have developed gas- PRODUCTS AND ━━ Fan heaters SERVICES ━ NPP equipment powered radiant heating ━ Air curtains ━ ━ systems that enable large ━━ Edge rolling-off ━━ Infra-red heaters industrial sites to cut their ━━ Oilfield equipment energy costs in half. And ━━ Heat guns this is a fact. ━━ Heat exchangers for ventilation and air conditioning systems Environment and health: We provide turn-key purification facilities, including ━ Stay•safe® solutions for ━ designing the technical and High-tech products: peritoneal dialysis construction blueprint. We ━━ Metal-carbon composites and ━━ Plastic manufacturing also build, commission, train corrosion inhibitors (containers, packaging for and set up work schedules for containers, confectionery, purification facilities.” ━━ Highly purified material medicine)

Energy and resource efficiency:

━━ Gas infra-red heating elements ━━ Light gauge steel framing (LGSF) 67 SUCCESS STORIES IN UDMURTIA 66 OOO ELMA OOO HIGH TECHNOLOGY CENTRE ALEKSEI TREFILOV 2006 ESTABLISHED CEO ELMA CORE PRODUCTS ━━ Projects+ (project management) ━━ BPM (process management) ━━ CRM+ (sales management) ━━ KPI (performance indicators management) MADE IN UDMURTIA ━━ ECM+ (electronic workflow)

PROMISING ━━ ELMA.IA (RPA, AI) DEVELOPMENT ━━ ELMA365 (a cloud-based system for SME automation) OLEG VYLEZHAGIN AREAS 2000 ESTABLISHED CEO “WE ARE HEAVILY ENGAGED OOO High Technology Centre STATE SUPPORT ━━ The company is registered in the Udmurt Republic’s Export-Focused SME IN TRANSFORMING CORE ACTIVITIES ━━ Developing tailored solutions for e-commerce, media and EXPERIENCE Register TRADITIONAL COMPANIES manufacturing enterprises INTO INNOVATIVE ONES KEY ━━ High speed of adoption ━━ Wide integration capabilities and AND IN HELPING OUR ━ Augmented reality and virtual reality TECHNOLOGIES ━ quick adaptation to a company’s COMPETITIVENESS ━━ Low entry threshold and visual CLIENTS START PROCESS- OFFERED ━ Computer vision ━ DRIVERS clarity infrastructure FOCUSED BUSINESS BY THE COMPANY ━━ Robots and manufacturing equipment monitoring systems ━━ Affordable implementation cost and TRANSFORMATIONS.” ━━ Low code support low cost of ownership and roll-out ━ Adaptive outer look, user-friendly STATE SUPPORT ━━ Federal tax benefit for companies registered in the Register of ━ ━━ Smart automation solutions support EXPERIENCE Certified IT Companies interface “IN OUR REGION, WE CALL IT COMPANIES OUR COLLEAGUES, NOT SALES ━ Russia ━ Netherlands ━ Kazakhstan KEY ACCOUNTS ━ Samsung ━ ivi.ru ━ ━ ━ ━ ━ OUR COMPETITORS. OVERALL, THE GEOGRAPHY ━━ China ━━ Ukraine ━━ Azerbaijan ━━ IEMZ Kupol (Izhevsk ━━ Alfa Bank ENVIRONMENT IS VERY FRIENDLY. Electromechanical Plant) ━━ UK ━━ Guatemala ━━ Tinkoff Many important annual ━━ Rosatom events are organised by the ━━ Russian Post regional administration and the ━━ STS Media Ministry of Informatisation and Communications, as well as by AWARDS ━━ Top 100 production developers and top 50 web developers according to Tagline individual companies.”

━━ Second place at Tagline Awards 2018 in the Best Smart TV App nomination

━━ Winner of the Golden App Awards 2018 ━━ Third place at Tagline Awards 2018 in the Best AR/VR App nomination 69 SUCCESS STORIES IN UDMURTIA 68 IN MANY HIGH-POTENTIAL DEVELOPMENT AREAS, UDMURTIA ...AND R&D, AND A NUMBER OF SUCCESS STORIES IN HIGH TECH- ALREADY HAS OPERATIONS SUPPORT FACILITIES... NOLOGY AND SCIENCE-DRIVEN MANUFACTURING MADE IN UDMURTIA MADE IN UDMURTIA

UNMANNED SYSTEMS LIFT WINCHES

Product description Launch date Did you know? Product description Launch date Did you know? Reconnaissance 2004 ━━ 2% of the world’s UAVs are manufactured in Udmurtia. Lift winches and worm- 2018 ━━ Russia’s first domestic lift winch manufacturing was unmanned systems ━ Udmurtia is a leader in aerial monitoring service Key success factors ━ and-worm wheel launched in the region. to ensure state border provision for the fuel and energy industry: UAVs annually (equipment for lift Key success factors protection, carry out Synergy with the Kalashnikov inspect over 5 million kilometres of fuel and energy ━━ As part of this process, the Industry Development winches) Synergy with the Kalashnikov reconnaissance and Concern (part of the Concern since infrastructure making over 20,000 flights . Fund issued a reduced-rate loan in the amount of rescue missions and 2015) aimed at driving military and www.segz.ru Concern (part of the Concern since RUB 249 million. ━ Aerial monitoring of wildfires and other national monitor high-risk sites industrial areas conversion ━ 2015) aimed at driving military and ━ Key accounts: major Russian lift manufacturers: disasters. industrial areas conversion ━ www.zala.aero OTIS, Shcherbinsky Lift Plant, Karacharovsky Me- ━ Key accounts: Roskosmos, Rosatom, Transneft, ━ chanical Engineering Plant. Gazprom, Rostelekom and defence and law enforcement agencies. ━━ Direct-drive winches are under development to extend the product range of localised production facilities.

MEDICAL EQUIPMENT NANOMATERIALS

Product description Launch date Did you know? Product description Launch date Did you know? Portable automated 1991 (defibrillators), ━━ Up to 2004, all first aid and ambulance teams were external defibrillators 2011 (DKI-N-11) equipped with DKI-N-04 defibrillators. A range of varnishes 1994 (incorporation), ━━ Silver Nano is Russia’s only paint with silver nanoparti- and paints with nano- 2009 (PAINTTECH nanopaint) cles certified by Independent Russian Product Quality including monitor ━ The enhanced DKI-N-11 monitor defibrillator is the only Key success factors ━ sized components with Assurance and Certification Agency defibrillators and device in its class manufactured in Russia. antiseptic properties and Key success factors defibrillators with thermal Conversion of military technology ━━ Silver Nano is used in healthcare facilities, kindergar- ━ DKI-N-11 defibrillators were used during FIFA World printers into civilian manufacturing; ━ bactericidal effects Partnership with Rosnano tens and schools, the Ministry of Defence and the Cup 2018 in Ekaterinburg, Rostov-on-Don, Kaliningrad, collaboration in product design with www.stena18.ru since 2012. Penal Correction Department facilities and also other www.axion.ru Samara, Saransk, Nizhny Novgorod and Volgograd. medical and R&D centres congested locations.

━━ This paint is designed to prevent spread of disease. 71 MADE IN UDMURTIA

APPENDIX 2: ADVANTAGES OF INVESTING IN INDUSTRIES SELECTED FOR AN IN-DEPTH AUDIT 72 DAIRY FARMING: PRODUCTIVITY MILK YIELD PER COW BY ENTERPRISE CATEGORY IN 2017 (TONNES) 73 ADVANTAGES OF INVESTING IN UDMURTIA (1/2) PEASANT FARMS AND INDIVIDUAL 757K FARMS ENTREPRENEURS HOUSEHOLD FARMS TONNES UDMURTIA 5.9 5.0 4.2

MADE IN UDMURTIA Raw milk production in 2017 MADE IN UDMURTIA ECONOMIC PERFORMANCE VORONEZH REGION 6.5 4.8 5.4 TATARSTAN 5.5 5.4 4.8 17% 0,7% Average for Russia Average for Russia ROSTOV REGION 5.5 4.9 4.5 BASHKORTOSTAN 11 % 4 % RUB 16BN % 5.0 4.4 4.2 ~93 RUSSIA 5.7 3.6 3.5 Share of private equity in livestock The share of livestock in regional Total investments in livestock Marketability of milk produced revenues company revenues is higher than for 2013–2017 in Udmurtia (2018) Source: Dairy News the national average (2018), Rosstat (2017)

Source: Rosstat (2017)

HUMAN CAPITAL IZHEVSK STATE AGRICULTURAL ACADEMY (IGSKHA)

28 4 % RUB 876К 100 % 5 130 56 of students majoring in agriculture, programmes were companies offer average EGE (Uniform Thousand of people employed Share of farming and livestock Revenue per employee in the forestry and fishery in Udmurtia recognised as the best internships to the State Exam) score in farming and livestock breeding in regional employment agricultural industry (estimate) study in the academy programmes according academy’s students among students to the Best Educational enrolled in all Programmes of Innovative programmes Russia programme for 2018 THE SHARE OF THE EMPLOYED IN THE AGRICULTURAL UDMURTIA 4.0 INDUSTRY IN UDMURTIA IS HIGHER THAN THE NATIONAL VORONEZH REGION 3.8 SHARE OF GRADUATES WHO ARE EMPLOYED (%) AVERAGE AND THAN IN PEER REGIONS (%) TATARSTAN 2.7 84% 97% ROSTOV REGION 2.8 66% Source: Main Information and Computer Centre BASHKORTOSTAN 2.7 (GIVTs), Higher Education RUSSIA 1.9 2015 2016 2017 Monitoring, 2018, IGSKha 74 DAIRY FARMING: UDMURT AGRIBUSINESS SUPPORT FROM THE FEDERAL 75 AND REGIONAL BUDGET, RUB ADVANTAGES OF INVESTING IN UDMURTIA (2/2) Total funding of Udmurt REGIONAL RUB 987.288K 2BN agribusiness in 2019 FEDERAL RUB 1,038.707K MADE IN UDMURTIA MADE IN UDMURTIA

FINANCIAL PERFORMANCE MAJOR SUPPORT PROGRAMMES IN 2019:

SHARE OF PROFIT-MAKING FINANCIAL RESULT TO REVENUE ORGANISATIONS IN 2017 (%) RATIO IN 2017 (%) UDMURTIA 84% 11% RUB 750M RUB 90M RUB 153M RUB 100M VORONEZH REGION 75% 14% Programme to increase Partial compensation of Measures to achieve the Subsidy for compensation productivity of dairy costs to acquire young output of one million of costs to acquire TATARSTAN 86% 10% cattle. Udmurtia allocates dairy cattle tonnes of milk (fully from and modernise plant ROSTOV REGION 100% 2% additional RUB 300m the regional budget) and equipment for BASHKORTOSTAN 86% 10% above the agreed co- agribusiness enterprises RUSSIA 82% 14% financing amount and organisations (fully from the regional budget) * The cost of construction advantage is calculated as the difference between the Russia’s EXPECTED BUSINESS COSTS OF CAPITAL CONSTRUCTION average construction The PSEDA in Sarapul includes livestock in its list of approved economic activity. cost index and the regional construction RUSSIAN REGION CONSTRUCTION* LAND** cost index. For RUSSIAN REGION UTILITY CONNECTION example, a 10 p.p. price advantage vs the average for Russia (pp) RUB/sq m advantage means the Power (%) / Water (%) / Heat (%) Total (RUB million) construction cost index in the region is 10 p.p. 19% 66% 15% 7 UDMURTIA 14 p.p. 1,2 UDMURTIA lower than the average 81% 19% 5 for Russia, i.e. the cost 1% of construction in the VORONEZH REGION 16 p.p. 5,8 VORONEZH REGION 45% 29% 25% 7 region is lower.

TATARSTAN 15 p.p. 60,0 ** The cadastral value TATARSTAN 25% 70% 4% 12 of agricultural lands for ROSTOV REGION 23 p.p. 2,6 the most recent year of ROSTOV REGION 8% 55% 37% 7 cadastral assessment in BASHKORTOSTAN 25 p.p. 3,5 the region. BASHKORTOSTAN 24% 42% 34% 11

Source: Co-Invest (2017), regional laws and regulations on tariff setting, Rosstat (2017), PwC analysis 76 PETROLEUM REFINING: 77 ADVANTAGES OF INVESTING IN UDMURTIA

RAW MATERIALS GUTSERIEV OIL AND GAS INSTITUTE (OGI) MADE IN UDMURTIA MADE IN UDMURTIA

Average of students majoring in applied geology, passing score mining and petroleum engineering 11M TONNES 79M М3 IN 2021 69 77% in Udmurtia study at OGI Approximate annual crude oil Approximate annual associated LUKOIL PERM is going to launch production in Udmurtia petroleum gas production in oil production at two new fields Cooperation Internship agreements Udmurtia in Udmurtia: Polushkinskoye and agreements with for OGI students Source: Rosstat (2017) Bykovskoye 20 employers 27

Source: Udmurtia’s laws and regulations EXPECTED BUSINESS COSTS OF CAPITAL CONSTRUCTION

RUSSIAN REGION CONSTRUCTION* LAND** UTILITY CONNECTION price advantage RUB/sq m Power (%) / Water (%) / Heat (%) Total (RUB million) * The cost of construction advantage is calculated as vs the average for the difference between OGI ALUMNI TOP EMPLOYERS Russia (pp) the Russia’s average construction cost index and the regional construction ━━ CEO of Belkamneft cost index. For example, a UDMURTIA 5 p.p. 189,8 68% 19% 13% 31 10 p.p. advantage means ━━ CEO of Ulyanovsk Neft the construction cost index in the region is 10 p.p. lower ━━ CEO of Orenburg-Gazprom IRKUTSK REGION 7 p.p. 194,5 27% 64% 8% 82 than the average for Russia, Neft, etc. i.e. the cost of construction ASTRAKHAN REGION 21 p.p. 137,7 41% 42% 17% 45 in the region is lower. ** The cadastral value TATARSTAN 13 p.p. 279,2 86% 12% 2% 87 of industrial land plots is specified for the last year of Source: Main Information and Computer Centre (GIVTs), Higher ORENBURG REGION 20 p.p. 412,6 44% 47% 8% 101 cadastral evaluation in the Education Monitoring, 2018, OGI region (permitted use type PERM KRAI 20 p.p. 231,3 74% 25% 1% 115 2 applied – land plots for construction of production SAMARA REGION 24 p.p. 393,1 and administrative 51% 43% 7% 67 facilities).

Source: Co-Invest (2017), regional laws and regulations on tariff setting, Rosstat (2017), PwC analysis 79 WOOD: 78 UDMURTIA’S LIMITED TIMBER RESERVES ARE OFFSET BY HIGHLY EFFICIENT PRODUCTION METHODS ADVANTAGES OF INVESTING IN UDMURTIA (1/2)

TIMBER RESERVE (CUBIC METRES) % OF FOREST ROUGH TIMBER (THOUSAND CUBIC PER SQUARE METRE OF FOREST FUND LAND METRES) PER PERSON EMPLOYED FUND LAND, 2017 IN THE INDUSTRY MADE IN UDMURTIA MADE IN UDMURTIA ECONOMIC PERFORMANCE UDMURTIA 57 48% 3.1 TVER REGION 62 57% 3.0 15% 0,2% Average for Russia Average for Russia LENINGRAD REGION 60 57% 0.9 9 % 1.3 % RUB 4.8BN IRKUTSK REGION 72 89% 2.8 PERM KRAI 71 63% 1.7 Share of private equity Share of the wood industry Total investments in the wood in wood industry revenues in the total revenue of regional industry for 2013–2017 companies Source: Rosstat (2017)

Source: Rosstat (2017)

HUMAN CAPITAL IZHEVSK STATE AGRICULTURAL ACADEMY

IGSKha offers higher education programmes in the forest 0,3% and woodworking industry Average for Russia 3300 0.5 % RUB 2,169К Number of persons employed Share of the woodworking Revenue per employee in SHARE OF FORESTRY GRADUATES SHARE OF FORESTRY GRADUATES WHO ARE EMPLOYED in the woodworking industry industry in regional employment the woodworking industry AMONG IGSKHA GRADUATES IN THEIR AREA OF EDUCATION (estimate) 7% 8% 100% 93% Source: Rosstat (2017) 74% 4%

2015 2016 2017 2015 2016 2017

Source: IGSKha 81 WOOD: 80 ADVANTAGES OF INVESTING IN UDMURTIA (2/2) MADE IN UDMURTIA MADE IN UDMURTIA FINANCIAL PERFORMANCE Wood processing is on the list of permitted types of economic activity in the Sarapul and Glazov PSEDAs

SHARE OF PROFIT-MAKING FINANCIAL RESULT TO REVENUE Source: Rosstat (2017) ORGANISATIONS IN 2017 (%) RATIO IN 2017 (%) RUSSIAN REGION UTILITY CONNECTION Power (%) / Water (%) / Heat (%) Total (RUB million) UDMURTIA 100% 23% TVER REGION 57% 6% LENINGRAD REGION 75% 15% UDMURTIA 68% 19% 13% 31

IRKUTSK REGION 73% 8% * The cost of PERM KRAI 100% 19% construction advantage is calculated TVER REGION 69% 9% 22% 64 AVERAGE FOR RUSSIA 65% 13% as the difference between the Russia’s average construction LENINGRAD REGION 57% 36% 7% 54 cost index and the regional construction cost index. For IRKUTSK REGION 27% 64% 8% 82 example, a 10 p.p. EXPECTED BUSINESS COSTS OF CAPITAL CONSTRUCTION advantage means the construction cost index 74% 25% 1% 115 in the region is 10 p.p. PERM KRAI RUSSIAN REGION CONSTRUCTION* LAND** lower than the average for Russia, i.e. the cost price advantage vs the average for Russia (pp) RUB/sq m of construction in the Source: Co-Invest (2017), regional laws and regulations on tariff setting, Rosstat (2017), PwC analysis region is lower.

** The cadastral value UDMURTIA 14 p.p. 189.8 of industrial land plots is specified for the TVER REGION 17 p.p. 284.6 last year of cadastral evaluation in the LENINGRAD REGION 5 p.p. 349.8 region (permitted use type 2 applied – land IRKUTSK REGION 5 p.p. 194.5 plots for construction of production and PERM KRAI 22 p.p. 231.3 administrative facilities). 82 MACHINERY: 83 ADVANTAGES OF INVESTING IN UDMURTIA (1/2)

ECONOMIC PERFORMANCE MADE IN UDMURTIA RAW MATERIALS MADE IN UDMURTIA

The Volga Federal District (VFD) produces more than 10% of Russia’s hot-rolled sheet steel and rod (used as 5% 0,6% raw materials for metal cutters) Average for Russia Average for Russia 4 % 2.1 % RUB 1.7BN 14% 15% Share of private equity Share of the machinery industry Total investments in the SHARE OF THE VFD IN RUSSIAN in machinery revenues in the total revenue of regional machinery industry for 2013–2017 PRODUCTION OF CERTAIN TYPES 3% companies OF ROLLED STEEL IN 2017 (%) 0% Hot rolled sheet Cold rolled sheet Plated rolled steel Profiled bar and rod steel steel Source: Rosstat (2017) Source: Rosstat (2017)

HUMAN CAPITAL KALASHNIKOV IZHEVSK STATE TECHNICAL UNIVERSITY

0,3% Average for Russia 6К 1 % RUB 1,949К 65 % 12 498 8 Number of persons employed Machinery industry’s share Revenue per employee in the of students majoring Companies have signed companies provide Small enterprises created in the machinery industry of regional employment machinery industry in machine building in specialist education internships for students by the university Udmurtia study at the contracts with the from the university university university Source: Rosstat (2017)

Source: Rosstat (2017) 85 MACHINERY: 84 ADVANTAGES OF INVESTING IN UDMURTIA (2/2)

FINANCIAL PERFORMANCE MADE IN UDMURTIA MADE IN UDMURTIA

SHARE OF PROFIT-MAKING FINANCIAL RESULT TO REVENUE Source: RUSSIAN REGION UTILITY CONNECTION Rosstat (2017) ORGANISATIONS IN 2017 (%) RATIO IN 2017 (%) Power (%) / Water (%) / Heat (%) Total (RUB million)

UDMURTIA 62% 3% VORONEZH REGION 75% 5% UDMURTIA 68% 19% 13% 31 BASHKORTOSTAN 77% 6% ORENBURG REGION 50% 6% VORONEZH REGION 83% 7% 11% 63 LIPETSK REGION 73% 5% * The cost of AVERAGE FOR RUSSIA 76% 8% construction BASHKORTOSTAN 65% 8% 26% 54 advantage is calculated as the difference between the Russia’s ORENBURG REGION 44% 47% 8% 101 average construction cost index and the regional construction 35% 36% 29% 29 cost index. For LIPETSK REGION example, a 10 p.p. advantage means the EXPECTED BUSINESS COSTS OF CAPITAL CONSTRUCTION construction cost index Source: Co-Invest (2017), regional laws and regulations on tariff setting, Rosstat (2017), PwC analysis in the region is 10 p.p. RUSSIAN REGION CONSTRUCTION* LAND** lower than the average for Russia, i.e. the cost price advantage vs the average for Russia (pp) RUB/sq m of construction in the region is lower.

UDMURTIA 14 p.p. 189.8 ** The cadastral value of industrial land plots is specified for the VORONEZH REGION 16 p.p. 378.9 last year of cadastral evaluation in the BASHKORTOSTAN 25 p.p. 201.3 region (permitted use type 2 applied – land ORENBURG REGION 23 p.p. 412.6 plots for construction of production and LIPETSK REGION 19 p.p. 219.3 administrative facilities). 87 FOOD PRODUCTION: 86 FINANCIAL PERFORMANCE

SHARE OF PROFIT-MAKING FINANCIAL RESULT TO REVENUE Source: ADVANTAGES OF INVESTING IN UDMURTIA Rosstat (2017) ORGANISATIONS IN 2017 (%) RATIO IN 2017 (%)

ECONOMIC PERFORMANCE OF THE INDUSTRY UDMURTIA 82% 5% LIPETSK REGION 85% 10%

4 % 2,6 % MADE IN UDMURTIA MADE IN UDMURTIA Average for Russia Average for Russia VORONEZH REGION 69% 6% % % RUB BN KALININGRAD REGION 73% 3% 2 6.3 4.3 7% VOLGOGRAD REGION 59% Share of private equity in food Share of the food production Total investments in the food SARATOV REGION n/a 3% production revenues industry in the total revenue of production industry for 2013–2017 TVER REGION 72% 1% regional companies AVERAGE FOR RUSSIA 78% 7% Source: Rosstat (2017)

* The cost of construction advantage is calculated as the HUMAN CAPITAL EXPECTED BUSINESS COSTS OF CAPITAL CONSTRUCTION difference between the Russia’s average construction cost 1,4 % index and the regional Average for Russia RUSSIAN REGION CONSTRUCTION* LAND** UTILITY CONNECTION construction cost index. price advantage vs RUB/sq m Power (%) / Water (%) / Heat (%) Total For example, a 10 p.p. К % RUB К the average for (RUB million) 10 1.4 3,543 advantage means the Russia (pp) construction cost index Number of people employed Food production industry’s share Revenue per employee in the food in the region is 10 p.p. in the food production industry of regional employment production industry (estimate) UDMURTIA 14 p.p. 189.8 68% 19% 13% 31 lower than the average for Russia, i.e. the cost Source: Rosstat (2017) of construction in the LIPETSK REGION 25 p.p. 219.3 35% 36% 29% 29 region is lower.

VORONEZH REGION 16 p.p. 378.9 83% 7% 11% 63 ** The cadastral value of industrial land plots KALININGRAD REGION -2 p.p. 884.8 69% 25% 7% 68 is specified for the RAW MATERIALS FOR UDMURTIA 26 last year of cadastral LIPETSK REGION 56 VOLGOGRAD REGION 15 p.p. 291.3 49% 34% 16% 35 evaluation in the PROJECT IMPLEMENTATION region (permitted use VORONEZH REGION 95 SARATOV REGION 24 p.p. n/a type 2 applied — land plots for construction AGRICULTURAL OUTPUT PER KALININGRAD REGION 62 TVER REGION 17 p.p. 284.6 69% 9% 22% 64 of production and PERSON EMPLOYED IN THE VOLGOGRAD REGION 36 administrative facilities). INDUSTRY IN 2017 (RUB MILLION/PERSON) SARATOV REGION 38 TVER REGION 37 Source: Rosstat (2017) AVERAGE FOR RUSSIA 5 89 ELIGIBLE ECONOMIC SECTORS FOR THE PSEDAS 88 IN GLAZOV AND SARAPUL

GLAZOV MADE IN UDMURTIA SARAPUL MADE IN UDMURTIA

1. Food production 1. Annual crops 19. Non-metallic mineral products (except for fire- resistant products, cement, lime and plaster; stone 2. Textiles 2. Seedlings cutting, processing and finishing) 3. Clothing 3. Cattle breeding 20. Finished metal products, except for machines and 4. Wood and wood products, except furniture; straw 4. Combined agriculture equipment (except for weapons and ammunition) and plaited goods Fisheries 5. 21. Computers, electronic and optical products (except 5. Rubber and plastic items 6. Stone, sand and clay for elements of electronic equipment and printed 6. Non-metallic mineral products circuits, and communication equipment) 7. Foodstuffs (except for dairy products, flour and 7. Fabricated metal products, except machinery and cereals, starch and starch-containing products, 22. Electrical switches and regulating equipment equipment baked goods) 23. Batteries Computers, electronic and optical devices Soft drinks and mineral water 8. 8. 24. Cables and cable fittings Electrical equipment Textiles 9. 9. 25. Electric lamps and lighting equipment General machinery and equipment Clothing 10. 10. 26. Household appliances Furniture Leather and related products 11. 11. 27. Other electrical equipment Finished goods Wood and wood products, except furniture; straw 12. 12. 28. General machinery and equipment IT and plaited goods 13. 29. Electrical and electronic equipment for vehicles Paper and paper products Health care 13. 14. 30. General component parts and accessories for 14. Paints, varnishes and similar materials for coating, 15. Libraries, archives, museums and other cultural vehicles printing ink and mastics facilities 31. Furniture Soaps and cleaners; perfumes and cosmetics Sports, recreation and entertainment 15. 16. 32. Finished goods 16. Chemical fibres 33. Health care 17. Basic pharmaceutical products and medical devices 34. Creative sector, art and entertainment 18. Rubber and plastic items 35. Sports, recreation and entertainment CONTACT PERSONS IN THE GOVERNMENT OF UDMURT REPUBLIC INVESTORS MAY CONTACT THE RELEVANT REPRESENTATIVES IN THE REGIONAL GOVERNMENT DIRECTLY

DIRECT CONTACT INFORMATION OF UDMURTIA REPRESENTATIVES FOR INVESTORS:

ALEXANDER SVININ MIKHAIL KHOMICH KONSTANTIN SUNTSOV

First Deputy Head Permanent Representative CEO of Development Corporation of the Government of the Head of the Udmurt Republic of the Udmurt Republic of Udmurt Republic to the Russian President Deputy Chairman of the Udmurt Republic Government

+7 (3412) 49-70-42 +7 (495) 600-62-05 +7 (3412) 22-00-00 +7 (967) 143-58-39 +7 (926) 520-52-97 +7 (909) 057-25-05 [email protected] [email protected] [email protected]

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