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Meeting Rostec CEO Sergei Chemezov

May 18, 2022, The Kremlin, Moscow

CEO of Rostec State Corporation Sergei Chemezov reported to the President on the corporation’s performance in 2021.

President of Russia Vladimir Putin: Mr Chemezov, Rostec is our largest corporation in the defence industry. This is your annual report?

CEO of Rostec State Corporation Sergei Chemezov: Yes, this is our annual report.

The Environment to Develop the New is the topic of our annual report. A lot has been done over 2021. Our consolidated revenue grew by almost 10 percent and amounted to 2.06 trillion rubles. We have crossed the important psychological milestone of two trillion. We have been trying to achieve this for a long time and, finally, last year we surpassed this barrier, this milestone.

Our consolidated net profit increased by almost 47 percent and constituted 163.5 billion rubles. EBITDA increased by 18 percent to 335 billion. The total market value of our assets is a new indicator that we introduced last year. It is 980.5 billion rubles, which is 50 percent higher than in 2020; this means that the value of our assets is constantly growing.

The share of civilian products in the consolidated net profit amounted to 45.5 percent.

Vladimir Putin: Good.

Sergei Chemezov: Yes. You have set us the task of reaching 50 percent by 2030. We set ourselves this task for 2025, but last year the share of civilian products was already 45.5 percent.

This, of course, has happened for the most part thanks to KAMAZ. We have such enterprises that produce quite a large volume of civilian products: KAMAZ and Russian Helicopters. The UAC [United Aircraft Corporation] has begun to produce civil aircraft in large quantities: not large enough yet, but we are striving towards this.

Vladimir Putin: Now you have a chance to conquer the domestic market.

Sergei Chemezov: That is right, of course.

Last year and the year before that our pharmaceutical holding, Natsimbio [National Immunobiological Company], did a great deal of work. We supplied our customers all across Russia with over 100 million sets of all kinds of vaccines: from the coronavirus to flu, and various other diseases. We manufacture most vaccines ourselves.

The financial results that we have achieved made it possible to increase the volume of investment by 18 percent, which amounts to 242 billion rubles today. Thus, at the end of 2021, the corporation achieved all the goals that we had set for ourselves.

I would like to discuss some of the recent events at our corporation. Rostec has implemented 72 equipment modernisation projects – primarily it has upgraded its aircraft engineering facilities that manufacture helicopters and planes, as well as aircraft engines, because this is our top priority business right now.

We have re-equipped our optics arm, introducing new technological solutions and fully retrofitting our optical devices plants in Vologda and Novosibirsk.

Vladimir Putin: Modernisation.

Sergei Chemezov: Yes. In-depth modernisation.

We have embraced and introduced 57 innovative technologies at our facilities, including for manufacturing aircraft engine parts using laser metal deposition, and innovative glass for the cabin of the new Russian-made cruise liner we are making, Peter the Great. It will sail the Volga and the sea, a river-sea class ship. And there is a service for urban management.

We have completed the development of 233 innovative products, including the MC-21–300 aircraft with wings made of a Russian composite material, and the Okhotnik UCAV. I will tell you more about these projects later.

The next project was a total redesign of the Tu-160M missile carrier with the new NK-32 engine. We have actually created a totally new aircraft. It looks like the previous model on the outside, but in fact, everything is new, including its engine and on-board equipment set – all the units have been replaced. All the documentation has been digitized; the last such aircraft was manufactured at the Kazan plant back in the 1980s.

We have 834 patents and 474 know-how certificates. Our total R&D investment reached 170 billion rubles.

What products did we create last year? First of all, it is the Checkmate light tactical fighter. Why did we choose an English name for it? Because it was designed mostly for export. We have invested our own capital in this aircraft without attracting budgetary funds. We hope the Defence Ministry will eventually decide to buy it as well. I believe that it will be a very good plane. It is a fifth-generation light aircraft. We first unveiled it during the MAKS air show last year.

It is a multipurpose new-generation platform, which can effectively rival other fifth-generation aircraft in long- and short-range combat.

Vladimir Putin: It is a light aircraft, right?

Sergei Chemezov: Yes, it is a light single-engine aircraft.

It is powered by a modified engine we previously used for the Su-57 fifth-generation plane. We are working now on the design documentation and have created a new model.

Vladimir Putin: I saw it.

Sergei Chemezov: Yes, we showed it. We plan to start batch production in 2027.

The PD-14 engine is already operational.

Vladimir Putin: Very good.

Sergei Chemezov: We have certified it. Its batch production will begin in 2023. Next year, we will also hold the certification tests of our composite wing and engine.

Vladimir Putin: On the MC-21?

Sergei Chemezov: Yes, on the MC-21. We will manufacture the first six planes in 2024.

Next, the Okhotnik UCAV. Its distinguishing feature is a flat jet nozzle. This new technical solution has made it less visible to radar. In addition, we are creating a new ground-based control system for this drone.

The first flight vehicle was rolled out in 2021. We will start its batch production in 2023 and will deliver it to the Defence Ministry.

The first Mi-171A3 offshore helicopter was also unveiled at the MAKS air show last year, when it made its maiden flight. It is designed for offshore operations and for servicing offshore drilling platforms. Our clients are our gas and oil companies. Its batch production will begin in 2023. It is undergoing certification tests now. The first helicopters are scheduled to be delivered in early 2024.

We have created a new M55R diesel gas-turbine power unit, which will be mounted on our frigates. It is the first Russian-made engine of this type. We are already starting its batch production.

We have done a lot in the field of healthcare; we were spurred on by COVID as well. In this regard, we have increased the share of civilian products. In particular, we created the Diathera magnetotherapy device. It is designed for the treatment and prevention of eye diseases. It treats myopia, hyperopia and computer vision syndrome, which has become very common among young people because they spend all day at the computer. This device does not require any special medical training: you can be treated at home or in any outpatient clinic. We have started producing it and it is already on sale. It was included in last year's Russia’s 100 Best Goods rating. It is a very interesting device.

COVID-Globulin. This drug is created from the blood plasma of people who have recovered from COVID and already have antibodies. It was used extensively to treat patients last year. It has been very helpful and is in high demand.

Aventa-Vita is a portable lung ventilator. It can be used in the ambulance, in air ambulance helicopters, in air ambulance planes, and also at home. By the end of this year, we shall start producing and selling it.

The SLE 6000 neonatal lung ventilator is a new version of lung ventilator to keep new-borns breathing. It differs from its predecessors in that it can prevent air retention in the lungs and has the capacity to automatically control saturation.

The oxygen concentrator, Oxyplus, is a very interesting device. It produces oxygen from the air. It produces, purifies and decontaminates it, and then delivers a sterile stream directly to the patient. You can use a lung ventilator with this machine anywhere, in any room, in any hospital, and it does not have to be supplied with special gases.

Vladimir Putin: How long did it take to set that all up?

Sergei Chemezov: Eighteen to twenty-four months. We started working on it as soon as the COVID started.

Vladimir Putin: So basically, import substitution for the products which are now difficult to import could be achieved in eighteen to twenty-four months?

Sergei Chemezov: Of course. We will start batch production of these machines, oxygen concentrators, in 2022.

Vladimir Putin: Good.


May 18, 2022, The Kremlin, Moscow