NIKOCHEM Group of Companies incorporates manufacturing ventures of Volgograd industrial site which are technologically interrelated (major products and co-products of one venture are raw materials for others according to product by product principle) and are built around the main caustic soda and liquid chlorine production process. The leading enterprises of the Group are JSC Kaustik and JSC Plastkard. In addition to them such enterprises of the Group as JSC Plastcab, LLC European Chemical Company and CJSC NikoMag are located on the industrial site.

NIKOCHEM Group of Companies is one of Russian chemical industry leaders which ranks the first in Russia for production of solid caustic soda, chlorinated paraffins, synthetic hydrochloric acid, commodity chlorine, liquid caustic soda and is among the top three leaders producing PVC. NIKOCHEM Group of Companies is in the list of strategic enterprises according to Russian Government regulation No.2, section IV (active roll position No. 149) of December, 23 2008.

Overall more than 6,000 employees work at the enterprises of the Group. Total number of employees of the industrial site amounts about 9,000 people including technologically interrelated ventures and contractors.

MANAGING COMPANY:
	LLC NIKOCHEM, Volgograd Founded for efficient management of the Group’s production assets within the framework of the integrated strategy.
Manufacturing enterprises:
	JSC KAUSTIK, Volgograd The main enterprise of the Group, one of the largest Russian industrial enterprises, holding the leading positions in chemical industry for the output of synthetic hydrochloric acid, commodity chlorine, liquid and solid caustic soda, as well as a wide range of other chemicals such as sodium hypochlorite, chlorinated paraffins, methyl chloride, etc. Core manufacture is production of caustic soda with the capacity of 240,000 tons and chlorine as well as production of caustic soda pearls with the capacity of 110,000 tpa according to BERTRAMS technology. Average number of staff 4 242
	JSC PLASTKARD, Volgograd JSC Plastkard is among the top three leading manufacturers of highly technological suspension polyvinyl chloride (S-PVC) in Russia as well as core grades of suspension polyvinyl chloride. PVC production capacity according to FUJI technology (Japan) amounts 90,000 tpa. JSC Plastkard is to date the leader in product range in the Russian Federation and is the only manufacturer of food additive PVC-S-5868-PG. Average number of staff 1 099
	JSC PLASTCAB, Volgograd JSC Plastcab has been an active participant in the market of flexible PVC compounds both in Russia and in countries of the near abroad for more than fifteen years. Modern highly technological machinery with capacity of 25,000 tpa enables the output of production with high repeatability quality characteristics, including by means of use of highly technological extruder Quantec® EV-15 made by BUSS, Switzerland, laboratory unit from Brabender, two-stage turbo mixer from Karatas, etc. Average number of staff 79
	CJSC NIKOMAG, Volgograd The company is engaged into the manufacture of various magnesium compounds based on the processing of bischofite deposit. In 2006 the company set up the unique manufacturing complex for the output of magnesium chloride pearls and flakes. Currently CJSC NIKOMAG is the sole manufacturer of magnesium chloride pearls in Russia and CIS countries. The project for production of nanostructured magnesium oxide carried out jointly with JSC Rusnano is being implemented. Average number of staff 60
	LLC ECC, Volgograd  LLC European Chemical Company was founded on the basis of JSC Kaustik and has been specializing in the manufacture of household chemicals and products for more than 30 years. The product line consists of detergents, cleansers, bleachers, automobile chemical products, paint and varnish products, Aquatics which is a chemical for water treatment in swimming pools. Products of the enterprise are well-known not only in Russia but also in the countries of the near abroad – Azerbaijan, Kazakhstan, Kyrgyzstan. Due to high quality the products have earned awards and medals at held regional and All-Russian fairs more than once. The latest machinery of TECHNE company provides the product of LLC ECC with high quality. Average number of staff 243
	CJSC Soligran, Moscow Joint venture with a Belgian company Solvay. It is engaged into the manufacture of different grades of PVC compositions and flexible PVC compounds. Produces a wide range of rigid and flexible PVC compositions as powders and pearls for production of wall panels of different sizes, siding, window profiles, windowsills, electroducts, floor mouldings, cables, pipes, corrugated hoses, footwear polymer compositions based on PVC, including without limitation oil-and-petrol resistant and freeze resistant.

FINANCIAL RESULTS	2010
Proceeds, Mio RUB.	10 352
Net profit, Mio RUB.. руб.	740
EBITDA, Mio RUB.	2 263
EBITDA profitability, %	22%
Taxes and duties paid to the budgets of various levels and extra-budgetary funds, Mio RUB.	1 115
Average number of staff	6 216

Major characteristics of Volgograd chemical industrial site of NIKOCHEM Group

1.1. The industrial site is located in European part in the south of Russia, on the territory of Southern industrial hub of Volgograd, in the very heart of Volga-Don traffic interchange and its square is 346 ha. Building density of the industrial site accounts for around 30%.

1.2. The industrial site is characterized with advantageous geographic position at the intersection of river, marine, automobile, railway routes of international importance which enables the shipment of products by “sea-river” vessels to the ports of five seas: the Black Sea; the Mediterranean Sea; the Caspian Sea; the Baltic Sea and the White Sea. Development of multimodal transportation junction in Volgograd opens broad prospects for international trade. The Company owns one of the largest in the country park of proprietary railway rolling-stock – more than 1,300 units (wagons, tank cars and thermo-tank cars, polymer trucks, diesel locomotives), which enables to perform repair and maintenance works and to secure stability of deliveries of any volume to the customers.

1.3. Important advantage of Volgograd industrial site is beneficial raw materials logistics, since unique proprietary proved deposits of raw materials resources (rock salt and bischofite) are located within a few kilometers from manufacturing units of the Group. The enterprises of the Group possess all the necessary licenses for geological survey and extraction of rock salt and bischofite at Svetly Yar deposit. Bischofite is valuable mineral for obtaining magnesium compounds, bromine and other chemicals. Content of various microelements in Volgograd bischofite exceeds their content in ten times compared to other known deposits, which proves its uniqueness.

The oil refinery located in the close proximity with the industrial site can act as a potential source of hydrocarbon raw material.

1.4. The industrial site has a developed energy infrastructure. Stable energy and heat supply is provided by two independent sources of electric supply and steam of high and low pressure. (Volgograd heat power plant (TETS-3) is the main source of heat and electrical power). The owner of Volgograd TETS-3 is LLC LUKOIL-Volgogradenergo. At the present day TETS is leased to NIKOCHEM Group. Volgograd TETS-3 is a power enterprise which has 3 turbines and 6 steam generators. Installed electric capacity of the power plant amounts 296 MW, installed heating capacity is 801 Gcal per hour. The other source of electric power is Volgogradenergosbyt. Two independent power sources are loaded by 58%. The capacity of steam pipelines is used on 42%. NIKOCHEM Group enterprises’ share in power consumption of Volgograd region amounts 6.7% of electrical power and 13.4% of heat power.

The industrial site also possesses modern system of water supply intake and water treatment (six systems of water circulation are used) which enables to satisfy the needs of the enterprises uninterruptedly, unused capacities of water supply intake and water treatment amount 44%.

There are five refrigerating facilities on the industrial site; they supply the enterprises with freeze of different parameters. Power reserves of refrigerating facilities amount 50%.

A new air separation plant for production of industrial gases (oxygen gas, nitrogen gas, compressed drained air as well as liquid argon, liquid oxygen and liquid nitrogen), their filing in cylinders is currently constructed on the industrial site jointly with an American company PRAXAIR. The new air separation plant will replace the working one and will not only be a reliable source of industrial gases meeting the manufacturing requirements of the enterprises of the Group on Volgograd industrial site but will also satisfy the requirements of customers in Southern Federal District. Capacity of the plant will amount 10,000 cubic meters per hour for oxygen, 10,000 cubic meters per hour for nitrogen and 600 tons per month for argon. Presently the phase of civil engineering constructive works is accomplished and equipment installation starts. Expected date of start up for the new air separation plant is December 2011.

1.5. The enterprises situated on the industrial site do not discharge waste waters into natural water basins. Production effluents as well as effluents from other Volgograd industrial enterprises and residential areas are forwarded to biological treatment facilities of continuous operation. Their power is 210,000 cubic meters per day (~ 75,000 ths m3 per year). Used power of facilities amounts about 52,000 ths m3 per year. The main technological method is mechanical and biological treatment of industrial and domestic waste waters of Krasnoarmeysky, Kirovsky districts of Volgograd and Svetly Yar industrial area with the following steel pipeline transportation (disposal) to sewage ponds and evaporation ponds cited on the territory of Svetly Yar area.

In addition to biological treatment facilities of the industrial site, all the enterprises are equipped with stationary units for collection and recycling of gas emissions and wastes. About 15% of turned out production is manufactured at the facilities which recycle wastes of other producing units.

1.6. In NIKOCHEM Group Research and Development is carried out by the proprietary Scientific and Production Center which maintains a contact with the leading Research and Development Institutes of the country. The Scientific and Research Center has at its disposal pilot production facility for testing and development of new technological processes and production of trial lots of products planned for manufacture. The vast majority of research and development carried out by the Scientific and Production Center are of applied nature and directed primarily to the developing of modern chemical technologies and new marketable products taking into account proprietary raw materials opportunities and production potential of the enterprises, situated on Volgograd industrial site and potential chemical park partners. Range of research activities and interests of the Scientific and Production Center is a wide one and aims firstly at the elaboration of a production process of organic and inorganic synthesis products, differentiation of a product line using own raw materials and basic products, and development of environmental technologies.

The Scientific and Production Center is certified for technical expertise and independence (Certificate No. ROCC RU.0001.513229 as of 19.09.2006) and in accordance with the certified area performs services for the participants of innovation production process such as development of new products upon customer’s request, adjustment of the offered technologies to the manufacturing process, ensuring the complete cycle of design and estimate documentation, formalization of all adjustments and expertises.

1.7. Highly knowledgeable specialists are employed at the enterprises of the Group as Volgograd is a large city with a developed scientific and educational infrastructure. Education is presented with a considerable number of universities which offer degrees in Management, Economics and Finances, as well as with technicians and engineers majoring in Chemical Technology. Agreements are concluded with most of the universities for pre-graduation practice, internships undergone by students and teachers at the enterprises of the Group which provides permanent and prompt adjustment of personnel to the enterprises of the Group and potential chemical park partners.