“Market has provided businessmen and managers with the excellent conditions and possibilities to work the creatively, to apply all the law permitted methods to increase the production, to achieve better economic indicators. And we merely use well these possibilities”.

(interview with Viktor Stepanovich Getmantsev, General Director of JSC “Aurat”)

In January 1993 the enterprise that was named at that time as “P.L. Voikov Chemical plant” was one of the first in Moscow transformed into joint-stock company “Aurat”. This word is derived from the Latin word “aurum” – gold; gold-containing compounds have a considerable share in the enterprise’s production program.

- That is, most likely, very well that the enterprise’s profile did not change, as a matter of fact, during decades(not considering the was years)?

- I would not say so. The record of a stable, not changing in practice plant resulted in that the reconstruction was postponed year in, year out and by the beginning of the perestroika the plant had not only got into the critical, but in desperate plight: the centralized funding was cut off and the fixed assets were worn out 70 to 80%, it was impossible to work normally …

- And, nevertheless, the enterprise worked and quite successfully. It’s well known that the transition to the market conditions had in practice no effect on the production volumes, product output dynamics.

- No, the temporary decrease in the production volumes in the early 90s has, nevertheless, occurred; during the period of 1990 to 1993 we produced annually approximately twice less products as compared with the 80s. But the setback in production was, to a considerable measure, accounted for not by the economic difficulties, but by the change in the nomenclature, transformation of the relations with consumers. And in addition, we began converting the production on the market bases long before this process became general and got the character of the state policy. Figuratively speaking, we went into the market when the even this word itself was known not to everybody …

- It is interesting, please tell about that more particularly.

- One of the important “sectors” of the enterprise’s nomenclature at that time was chemical reagents. Well, You know, those that are used in schools at the lessons and in higher schools at the practical studies in chemistry. We produced altogether up to thousand and a half of their descriptions annually. And once we looked into a shop “Chemical reagents” at the Nikolskaya street and discovered small jags with our products with the date of manufacture of ten years’ prescription. And that did not especially worried anybody. The sectorial Ministry took no interest in commodity sales. Moreover, if one asks well, it gave funds for the manufacture development of products not being in demand. Prodigality? Certainly! But, alas, characteristic generally of the command-administrative economy.

However, it’s clear that cannot go on infinitely. And we began reconstructing our production aiming not at a featureless sales system, but at particular consumers: shops, higher schools, scientific institutes, research centers. The range of manufactured products has been sharply reduced, but instead they were certainly bought entirely. The list of produced reagents was constantly changed depending on the demand.

Of course, such an approach (typically market one) did not fall within the system of strict planning and conflicts with functionaries occurred constantly. Bu we firmly held our ground and, as the later events showed, had been right. It turns out we got into the “market tram” not at the terminal stop, but were already in it when it began moving.

The second feature of the enterprise’s work in those far from market 70s-80s consisted of that the core of the financial activity was not “product sales” (which were, chiefly, required from the plant from the “top”), but the state of the bank account. If one recalls, the majority of enterprises at that time were not worried about that. There are no funds in the account – it was always possible to come to the Ministry asking for money and it will, certainly, give funds.

Already for a long time we started to see that our account is constantly replenished, that the plant has always funds for “rainy day”. And when such days came, the availability of certain funds in the account helped the enterprise to hold out: to support and later to develop the production. All these years we had even no delays with wages payment! (By the way, an average wage in our enterprise is about R. 7.6 thousand). In short, the foundation of the relative prosperity was laid as far back as in the “pre-market” years.

- It goes without saying that it is a rare foresight. Are you really developing the production now too at the expense of the funds accrued during those far years?

- Of course, not. We constantly and successfully earn moneys for these purposes now as well. But enterprise’s sound financial situation at the beginning of the market reforms provided the “maneuvering freedom”, assisted to reconstruct the production during a short period and in the due line so that the funds earned already under the market conditions should go to the enterprise’s account. And just these funds were used to reconstruct, modernize and technically re-equip the plant’s shops.

By the way, quite a lot was done in this line. We pulled down a number of physically and morally obsolete buildings and structures: garage, combustion furnaces, protoxide production plants - tin oxide, chromolane, organic reagents – acid discharge unit, finished product warehouse. We reconstructed the boiler house having replaced two boilers for more powerful and economic ones. New objects have also appeared. The most noticeable among them are units to produce aluminum polyoxychloride as fluid and crystals. Recently, the production of liquid and dry polymer mixtures of aluminum polyoxychloride and aluminum sulfate, liquid aluminum sulfate and dry one of an increased aluminum oxide content had been commissioned. These units cost us more than USD 15 million. The equipment delivery and construction on the “turn key” basis were carried out by the Finnish companies “Kemira”, “Skanska”, Italian companies “Contec” and “Niro”.

- You have, obviously, incurred debts?

- No, we coped with our own resources, no kopeck of borrowed bank funds were used. By the way, one of the most important principles in transacting business at “Aurat” is to manage in developing the production without any credits and in product sales without any agents.

- How did the 1998 financial crisis affect your enterprise’s activities? - Only positively. The import of a number of foreign chemical reagents decreased due to the sharply increased price and the domestic consumers began looking for domestic suppliers of a series of chemicals; many of them began recoursing to our enterprise. We are particularly glad of the growth of the number of buyers from the pharmaceutical industry. By the way, drugs in our country were not bad formerly too. Western suppliers try to influence the Russian consumer by means of fine, bright packing, aggressive advertisement. Now such tricks have an effect more and more seldom: medical drugs comprising the chemicals produced by “Aurat” are in more and more demand and that makes us happy.

- It seems that there are in general no problems that would seriously worry You and that would somehow complicate the activities of JSC “Aurat”?

- Such problems exist, but they are common in practice for all the enterprises of Russia. They are an excessive tax burden, the unavailability of the protection policy as regards domestic manufacturers, too high interest rates on bank credit resulting from the RF CB increased rate of discount. All that worries me like other managers of the economic structures.
Despite all the last month reforms the Russian tax system has not become such as would awake interest of the enterprises in extending the production of commodities and services. Tariffs for energy resources and railway tariffs must be reduced. Laws aimed at suppressing “parasitizing” capital and promoting “producing” capital are required. The interest credit rate for enterprises manufacturing real commodities must not exceed 10%. These are the problems of a national importance that need be solved first. But even with their availability I see now no such problems that would jeopardize the normal production life of “Aurat”.
I consider as the main thing in the practice of our enterprise that it proves: with the availability of the character and sound professional persistency, relying only on one’s own resources quite good results can be achieved under the market conditions.

Nikolay Petrov