By Atom Markarian
The London-based Ransat Group was formally given control of the state-owned chemical giant Nairit on Saturday, promising to breathe a new life into the troubled flagship of Armenia’s once thriving chemical industry.
Under the terms of a five-year management contract with the Armenian government, the Indian-owned group is to invest $25 million and ensure a threefold increase in Nairit’s production in the next three years. The deal is understood to be a prelude to its eventual purchase by Ransat.
“Our idea is to move into the factory, modernize and bring it to international standards,” Anil Kumar, a top Ransat executive who will manage Nairit, said at the signing ceremony.
“Obviously, Nairit is a good factory with a good but a little outdated technology. It needs a lot of marketing efforts and modernization,” he said.
Armenian Minister of Trade and Industry Karen Chshmaritian said the deal marked a major success in the government’s efforts to revitalize the sprawling factory located on the southern outskirts of Yerevan. “I am really glad that we have found a company which took the risk [of managing Nairit],” Chshmaritian told reporters. He said the two sides will work out the terms of its privatization in the coming months.
Britain’s ambassador to Armenia, Timothy Jones, also welcomed the takeover, saying that foreign investment is vital for the country’s economic development. “London is the best place to look for foreign investment to come from,” he added.
Kumar said his most immediate task is to settle $5 million in Nairit’s outstanding debts to the energy and gas supplies, signalling that he hopes the government will write off the bulk of it. He also said Ransat will mainly rely on local specialists despite its plans to introduce major technological changes in the manufacturing of Nairit’s main product, chloroprene rubber.
“Most of the core management team will be local. We don’t intend to bring a lot of people from outside the country – two or three maximum – because we are pleased with the talent available locally,” Kumar said.
The factory, which is currently standing idle, employs approximately one thousand people. The British company has pledged to increase that number considerably but undertook no specific job commitments.
With an annual turnover of $500 million, Ransat Group is said to be a major player in worldwide dealing in various products such as commodities, including a long list of chemicals, metals and ceramics. The company also has software development and financial service divisions.
Kumar said Asian markets will account for a large share of its sales of Armenian synthetic rubber, which will be exported through the Persian Gulf and Black Sea ports in Iran and Georgia respectively. “Armenia’s location doesn’t really bother us because we have two routes to get the goods out,” he explained.
The deal with Ransat followed the failure of the government’s talks with the Ukrainian firm Inter-Contact on its possible takeover of Nairit. Industry officials in Yerevan had announced in October that it is close to buying a controlling stake in Nairit.
Incidentally, Inter-Contact’s chief executive, Vitaly Buchko, was also present at Saturday’s signing ceremony. But he declined to comment on the reasons for his company’s decision not to go ahead with the Armenia deal.
Some informed sources told RFE/RL that the Ukrainians decided against buying Nairit after failing to secure a discount price for Russian natural gas, the main raw material for the production of rubber, supplied to Armenia.