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February 2, 2007

“Nizhnekamskneftekhim” INC Board of Directors regular session

The Board reviewed a strategic program of “Nizhnekamskneftekhim” INC development in 2008-2012 delivered by V. Busygin, General Director “Nizhnekamskneftekhim” INC. Basing on the preliminary estimates as to the proposed investment projects, the NKNK proceeds will amount to RUR 158bn in 2012. The program is aimed not only at expanding the existing facilities capacities but also at constructing large-capacity petrochemical complexes, which require sizable investment outlays.
“Nizhnekamskneftekhim” INC is a major producer and exporter of petrochemical products in the Russian Federation and is a world leader in manufacturing some types of products. The Tatarstan Republic Leadership, the Management, the Company shareholders exerted colossal efforts to have achieved a unique for-the-global-scale-company advancement of “Nizhnekamskneftekhim” INC in 1995-2006. The Company’s financial figures augmented on average 10 times, proceeds increased from RUR 3.2bn in 1995 to RUR 47.6bn in 2006. Sales income within the same period augmented from RUR 0.66bn to RUR 5.4bn, net gain from RUR 0.46bn to RUR 3.2bn, which resulted in increased tax deductions to the budgets of all levels.
To further strengthen the Company’s position in the petrochemical market, “Nizhnekamskneftekhim” INC devised an investment program, which contemplates for investments to develop the Company’s existing production facilities and to set up new cost-effective petrochemical complexes amounting to RUR 115bn.
It is to be implemented through captive and borrowed funds. To make use of only a loan capital, required to finance the NKNK investment programs, may deteriorate the Company’s liabilities pattern, and is impossible without shareholders’ participation. The NKNK’s current credit and loan debts and debts, which will appear with the investment loan amounts increasing, will make it impossible to gain loans from investment institutions.
In such a situation, the only worthwhile and efficient way of attracting investment funds for the first stages of the NKNK development strategy is a supplemental issue of the Company ordinary shares to allocate by closed subscription among the Company shareholders. Allocation of supplemental shares will enable to attract funds onto the Company’s issue account amounting to RUR 25.8bn without creating a debt burden for “Nizhnekamskneftekhim” INC, will enable to ensure achievement of the Company’s financial coefficients at the required level and to additionally gain RUR 100bn of loan capital. Issuance of supplemental shares by way of closed subscription only among the NKNK shareholders at the allocation price equal to the share face value will ensure constancy to the number of shareholders and will prevent their share fractions from degrading.
The NKNK’s renovated development strategy will enable not only to secure the Company’s positions in the segments of the Russian and overseas goods markets but also to gain new areas of the same, to raise competitive capacity and earning capacity of the Company's products and, thereafter, the income level of the Company employees and shareholders, to increase the amount of tax assignments to the budgets of all levels, which will result in the Company’s enhanced contribution to the accomplishment of Nizhnekamsk town and the Russian economy.
The Board of Directors took into consideration the preliminary results of the NKNK’s operations over 2006 and stressed the need of maintaining a positive advancement in 2007. Over the reporting period, the marketable output amounted to RUR 46bn. That is 115.6% in established prices, compared to the previous year relevant period. The NKNK’s proceeds constituted RUR 47.6bn, 18% rise compared to previous year. The Company effects payments to the budgets of all levels in time and in full. The wages of employees constituted RUR16 600, 14.3% rise compared to the relevant period of 2005.
The Board members took into account the raw material and finished product market survey results and the information on risk management at “Nizhnekamskneftekhim” INC, as well as approved of the procedures in financing the NKNK’s innovative activity in 2006.
The Board approved the date to hold the Company shareholders’ regular annual general conference as 26 April 2007; the Conference opens at 10 a.m.; venue – Assembly Hall in Administrative Building A-12.
The date to compile the list of the Company shareholders having the right to attend the shareholders’ conference on 26.04.07 shall be 10 March 2007.




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