Sibur Outsources Manufacturing to Marketing Wing

Sibur has announced that it will outsource its tyre manufacturing business to its marketing department, Russian newspaper, Kommersant, has reported. By this Autumn, the stocks of the four Sibur controlled tyre works will be transferred to Sibur Russian Tyres (SRT). At the moment SRT works exclusively in a sales and marketing role. Sibur is reported to have explained that the tyre business will be split off into a seperate structure because the company needs outside investment for development.

Established in 2002, SRT is 100 per cent owned by Sibur. The company acts as a general dealer for Sibur tyres and is in charge of the distributorship network in Russia and of the marketing policy on the tyre market. Sibur holds over 76 per cent in Yaroslavsky Tire Works, around 83 per cent stake in Omsky Tire Works, 100 per cent of Uralsky Tire Works and more than 82 per cent in Voltire-Prom (Volzhsky Tire Works). In 2004 it produced 15.1 million tyres.

The company began capitalising its debts in Febraury 2005 by transferring liquid assets (including 100 per cent of SRT) to a new company to be 100 per cent owned by Gazprom. Now Gazprom holds 90 per cent of Sibur, but in view of the recent news, the reorganisation will go beyond the initial plans with the tyre business actually becoming a separate division.

Sibur has since specified to Kommersant that, along with setting up a new company, a tyre holding will be created – the stocks and shares of the tyre works will be transferred directly to SRT. “The concept of tyre business split-off was presented to Gazprom’s Board of Directors on 4 February, simultaneously with the program to capitalize Sibur’s indebtedness,” said Dmitry Konov, senior vice president at Sibur. “No one in the management of our parent company has opposed that scheme.”

The new company will have full authority to manage the tyre business of Sibur, including determining production, marketing and price policy. All tyre production will continue operating as it does presently. When reorganised, the company will be led by Andrey Brodovich, the current head of the management.

According to Mr Konov, creation of the new holding will complete in the third quarter of this year. “We are willing to seriously isolate tyre business from other activities, because it principally differs in structure and economy,” Mr Konov said. “Moreover, it is vital to consolidate profit centres for tyre production, currently split between Sibur, SRT and the works within one and the same structure – to pack them under a common cover. Then, we will be able to attract an outside investor to develop this direction. The necessity of this move is evident.”

Not long ago, Sibur was in talks about selling portions of its tyre business to Michelin. Negotiations have since come to a standstill and, at present, Sibur is not negotiating with any potential buyers. Having said this, the company been “consulted on the issue,” Mr Konov pointed out.