Rating "Expert-400. The largest", 2006

Annual Rating of the largest companies

A formal look at the Rating results brings about, as they say, the feeling of profound satisfaction. In 2003 total earnings of 400 largest Russian companies grew up by over 25%. One year later – by another 30%. And this time – by 33.1%.

The figures may be easily commented on in relation to oil prices and improper quality of growth. Such comments can not be fended off. But two new tendencies – as usual, good and bad ones – are to be underlined.

First, the good news. The financial sector of “Expert-400" has made drastic steps forward. The domestic banking system was always weak and passive. But in 2005 banking dynamics were in line with headlong movement of the oil industry (see “The year of oilers and bankers"). Obviously, it is too early for financiers to rest on their laurels, since the financial system needs to be much more powerful. But the financial breakthrough looks pretty encouraging. Besides, our stock market at last has grown into a full-fledged capital market (see “The third of our national endowment"). The market of corporate debts has also gained momentum. Some three years ago only selected few might use market mechanisms to attract financing, but now even a little-known company outside four hundreds may relatively easy borrow development money for quite reasonable price. There is one “but": even such modest financial potential is not highly demanded. Money is usually attracted for small-scale local projects – not for strategic business development.

Now, the negative side of the story. The financial sector plus spheres directly connected to population demand (retail, housing construction) cover the whole zone of operation of “oil money". Couple of years ago “investment demand" was obviously on the rise: money from the raw material industry moved to processing sectors of industry, like machine-building (purchase of equipment). But last year the tendency showed signs of stalling. Today we definitely witness the investment demand wearing thin, majority of industrial sectors being rebounded (in real prices).

But everything is not lost yet. We have conducted special survey to give a systemic assessment of non-raw-material sectors of economy. The results testify to the fact that, hopeless as they may look, all branches of industry are capable of returning their lost strength, at least, partially (see “Outside the oil province"). Of course, the return can not happen without efforts. Success may be achieved only with the active state support, namely, efficient implementation of the notorious industrial policy.

Tendencies of large-scale business

Year of oilers and bankers
Large-scale business has two clear centers of growth – oil and gas sector and service sector. Neither of them properly encourages development of manufacturing industry.

Outside the oil province
Even the most problematic areas of non-raw-material sector are still capable of overcoming the crisis. But it can not be done without persistent industrial policy.

Methodology of compiling Rating and information

Towards reverse globalization
Interview with PricewaterhouseCoopers partner Aleksander Chmel

Expert-400
Rating of the largest Russian companies by volume of sales

Capitalization

One third of the national endowment
Our stock market has become a real instrument to attract investments. But the largest player at this market is the state. The state is the source of main pricing news and – more important – the owner of one third of capitalization of 200 most expensive Russian companies.

Industries' reviews

About companies

Time, go backward!
Oil and gas
Russian oil and gas companies have failed to use favorable economic situation to develop their own business. The state has been taking the industry back, hindering its development.

Revenge of wires
Telecommunication
Cell phone companies have lost momentum at the communication market. Internet and multimedia service providers move to the forefront.

Faster and faster
Retail
Absorbing, investing, borrowing, inventing new formats - retail networks keep on their aggressive movement all over the country.

From state-guaranteed order to consolidation
IT
The state made its contribution to the IT industrial development. Now a lot depends on rates of business consolidation.

Breakthrough for an hour
Finance
The Financial sector in 2005 has definitely moved on. But the progressive movement may be easily cut short, if Russia fails to protect interests of national bankers and insurers when entering WTO.

New Expectations
Rosneft
Rosneft has come to a point beyond which explosive growth through M&A activity no longer meets the expectations of the market. From now on, its performance will be evaluated on the efficiency of its production operations and investment activity.

Under the Banner of Innovation
AFK Sistema
AFK Sistema is the only highly diversified concern in the upper part of the rating. The ambitions of its owner Vladimir Yevtushenkov go even farther: he is talking about creating a global innovative industry.

The Second Will be the First
Vneshtorgbank
In ten years from now, Vneshtorgbank will become the largest Russian bank with capitalization of USD 40 to 50 billion, a global network of branch offices, and at least one subsidiary in Western Europe – these are the plans set by the bank’s management.

Yellow Leader
Euroset
Aggressive pricing and unorthodox marketing policies have made Euroset an unquestionable leader in the sales of mobile phones. But the company does not want to stop at that: it has moved into new business areas and has emerged as the leader of all Russian retail.

Run Down by the Russian Express
Transmashholding
Co-owners of Transmashholding had selected an underfinanced segment of machine-building industry to create an effective and explosively growing business valued at almost one billion dollars. Nonetheless, predicting its future prosperity is not a safe thing to do, considering its debt burden and competition from international giants.

Cement Ambition of Filaret Galchev
Eurocement
Having consolidated the lion’s share of the market, Eurocement Group has created favorable conditions for the development of the whole Russian cement industry.

Respectable Retail Insurance Business Needs a Clean Market
Ingosstrakh
Ingosstrakh starts expansion into a relatively new retail business. The new CEO Alexander Grigoryev wants to reform the company and change the rules of the game in the insurance industry.