OREANDA-NEWS. September 24, 2012. In Berlin, JSC Kirovsky Zavod and European industrial holding Euro Group S.p.A. signed a Memorandum of Intent on the creation of a joint venture involving the production of components for electrical machinery. Total project investments are projected to reach at least EUR 7.5 mln. Production launch is scheduled for July 2013.

The joint venture is being created with the aim of manufacturing items made from electrotechnical steel and rotor cores for electric motors and generators. The new production facility will be located in St. Petersburg on the grounds of JSC Kirovsky Zavod. Financial investments in the project are expected to total a minimum of EUR 7.5 mln over the next 5 years.

The contribution by Italian holding Euro Group S.p.A. in the newly-created company will be equipment, investments, practical experience, know-how, production technology and market expertise. Potentially emerging as one of the key consumers of the new company's products is concern subsidiary Siemens AG, whose core business areas include the production of electrical goods and power-generating equipment. For its part, JSC Kirovsky Zavod will furnish the site for the new production facility, its own technologies and R&D achievements, and the required financial investments, provide organizational, legal and practical support for project launch at the local level, and assume responsibility for the resolution of ongoing production issues associated with procurements, logistics, etc. According to the Memorandum, Euro Group S.p.A. will hold a 51% stake in the new company, with the remaining 49% of shares owned by JSC Kirovsky Zavod.

JSC Kirovsky Zavod General Director Georgiy Semenenko and Euro Group S.p.A. President Sergio Iori signed the Memorandum in Berlin within the scope of the "Railway Machine-Building" international conference held at the Innotrans 2012 exhibition. Memorandum conclusion was the result of intensive negotiations conducted by company representatives throughout 2012. The document sets out the intentions of the parties with respect to the creation of the joint venture, and establishes the key phases on the path to production launch. Pursuant to the Memorandum, the articles of incorporation should be signed by year-end 2012. Production launch at the new enterprise is slated for July 2013.

JSC Kirovsky Zavod is one of Russia's largest industrial holdings in the field of machine-building. Core business areas: metallurgy, agricultural and construction machine-building, power engineering, tooling and machining production, the mechanical processing of component parts, and the management of non-business assets.

Consumers of plant products include companies and enterprises in the agricultural and fuel-and-energy complexes, rail, industrial and civil construction, the oil-and-gas sector, nuclear power, defence, forestry and utilities, rail transportation, shipbuilding and escalator-building.

Kirovsky Zavod Group 2012 earnings are projected to total RUB 20 bln. Group company finished products are exported to more than 20 countries worldwide. Kirovsky Zavod employs 6,500 workers.

Euro Group S.p.A. is an industrial holding company comprising enterprises specializing in the production of parts for rotating electrical machines. The company is the largest European manufacturer of electrical steel forgings. The holding employs about 1,200 people. In 2011 the annual turnover of Euro Group S.p.A. amounted to €237 mil.

Electrical steel processing volume exceeded 240,000 tons.