Kalashnikov Group Modernizes Production Facilities

Kalashnikov group today announced the successful completion of the production facilities modernization and process optimization projects scheduled for 2015.

The company had earlier raised investment of RUB 2.1 bn (USD 34.45 million) - a 50% growth compared to 2014 for the project that involved introduction of new machine tools, processes, complete overhaul, and IT infrastructure.

The company's revenue for the 12 months of 2015 rose by RUB 5.3 bn (USD 86.95 million) to RUB 8.2 bn (USD 134.53 million) and was almost 3X higher than revenue in 2014.

"In the last two years we have invested over RUB 3 bn (USD 49.22 million) into production development. It has made it possible to achieve a deep optimization of the key manufacturing and business processes, and has significantly reduced the ongoing operating costs.  The steps we have taken have led to a four-fold output growth to RUB 9.4 bn (USD 154.22 million). We have reached the break-even point, with a net profit of RUB 2.1 bn (USD34.45 million) in 2015", said Aleksey Krivoruchko, Director General of Kalashnikov.

"In 2016, we are going to nearly double the output to RUB 17.7 bn (USD 290.4 million) and to expand the product range, so higher efficiency and comprehensive quality enhancements are still our No. 1 priority for 2016" he added.

Under the Investments Program for 2014-2017, the modernization projects in 2015 have delivered economic benefits worth RUB 311 mn (USD 5.1 million), and the value is expected to grow further.

The advanced technologies and lean manufacturing concepts introduced in 2015 resulted in reduced labor expenditure, faster production planning and manufacturing operations. They have also had a positive effect on lowering operating costs and improving the overall production efficiency.

In 2014-2015, the new manufacturing equipment and the lean production approach tripled the productivity to RUB 1.8 mn (USD 30,000) per employee per year. The machining time in the small arms batch production halved while delivering significant improvement in quality.

Since the launch of the production facilities upgrade project in 2014, over 130 state-of-the art NC machine tools were purchased (over 60 units in 2015).

Currently the large-scale Product Development Center and forging facilities upgrade projects are under way.   The facilities will be used for tools and special-purpose machinery production, and will accommodate a number of other departments.

A new central warehouse is scheduled to be commissioned in Q1 2016. The warehouse will have both office space and storage facilities with advanced handling, sorting, and tracking systems.  The warehouse total floor space will be 11,000 sq.m.

The weapons manufacturing pre-assembly and assembly facilities and a new 4-level administration building have reached the final stage of their total renovation and overhaul. The projects are expected to be completed in April 2016.