AFK Sistema to expand its operations in technical textiles market

AFK Sistema, Russian financial conglomerate owned by a local billionaire Vladimir Yevtushenkov, seeing big potential in the domestic technical textiles market is considering expanding its operations in the domestic technical textiles and fabrics market in the coming years, said Mikhail Shamolin, President of AFK Sistema.

Planned volume of investments that could be allocated by Sistema in the Russian technical textiles market is not disclosed at the moment, however, according to some analysts, they may be in the range of US$ 150-200 million at the initial stage.

According to estimates of AFK Sistema, the Russian technical textiles market is currently estimated at RUB 32 billion (US$ 450 million) with a possibility of a significant increase during the next several years.

Despite all the attempts the state has taken in recent years to ensure import substitution, at present, up to 80% of technical textiles in the domestic market are still imported into Russia from Vietnam, China and other countries, which is unacceptable for a country like Russia.

According to the plans of AFK Sistema, the production of technical textiles in Russia is currently associated with significant economic benefits, and in particular lower costs, compared to China and other Asian states, which is mainly due to the cheaper energy resources and relatively low wages in the industry. That could attract investors in the sector, including foreign.

Currently, the company is completing the development of the expansion strategy that may take place both through the organic growth and through the acquisition of the already existing assets.

There is a possibility that the majority of future production will be supplied to the domestic market, while the remaining goes abroad. No further details were disclosed.

According to Shamolin, investments in the technical textiles segment are considered by the company as very attractive, due to a high share of imported products in this market and associated low costs.

In the meantime, AFK Sistema is now the only large investor, expected to start the production and later the export of technical textiles to the foreign markets.

Practically the same plans have been recently announced by Gazprom Khimvolokno, one of Russia’s largest producers of chemistry products and technical textiles, which plans to start exports of its technical fabrics to the EU market already by the end of the current year, according to the company’s official representative Dmitry Frolov.

Currently, negotiations with potential customers are underway, with the initial supplies possibly going to Poland and later to other countries of the European Union.

The Russian government has already welcomed the plans of domestic investors to allocate funds for the expansion of domestic technical textiles production, but also noted the necessity to provide investments for the acceleration of R&D activities in the industry.

To date, the government has already invested funds in the establishment of one of Europe’s largest scientific clusters and R&D centres in the technical textiles field, taking place at the facilities of the Saratov State University, one of the largest universities in Russia and Eastern Europe.

The establishment of the new centre in the city of Saratov, a region in the Central Russia, which was closed to foreigners during the Soviet times, took place as part of the recently announced state plans to support the development of innovative technical textiles products for the Russian army, as well as other segments of the Russian industrial production.

In addition to the Saratov State University, the project involves the participation of the Russian Foundation for Advanced Studies (the Russian investment fund, which funds researches in different scientific spheres) and the Russian Ministry of Science and Education.

According to Salkovsky, at the initial stage the new cluster will focus on the design of innovative medical dressings, based on nonwovens and technical textiles, and its range will be significantly expanded during the next several years. Details of other products that will be produced at the capacities of the new cluster are classified.

Salkovsky also added that in recent years there has been an interest of the Russian government, and in particular the country’s Ministry of Defence, in the design of equipage of a future soldier, which created conditions for the acceleration of scientific research, aimed at the developing special materials and fabrics based on nonwovens and technical textiles that could be used by soldiers from the Russian land forces, airborne forces, as well as other Russian military units.

It is planned that scientists at the new cluster will focus on the design of a special fabrics based on nonwovens and technical textiles that will make soldier immune to electromagnetic radiation, biological radiation, toxic substances and extreme environmental conditions. In addition, the use of new materials will make soldiers invisible to night-vision goggles and radar.

The new types of nonwovens that will be designed within the laboratories of the new cluster is by 10 times better based on a number of parameters and can be used in a wide range of industries, but mainly in the defence sector.

The majority of future production at the new cluster will be mainly supplied for the needs of the Russian defence sector and other segments of the Russian industrial production. At the same time, a portion of the products will be exported.

The volume of investments in the establishment of a new cluster to date has amounted to US$ 250 million. Funding of the cluster is expected to come from the funds of the Russian state defence order, which this year constituted a record level of RUB 3.3 trillion (US$ 70 billion).