EKATERINBURG:  March 21, 2005 - Today, one of Russia's leading manufacturers of cosmetic and hygiene products, Open Joint Stock Company Concern "KALINA" (ISIN RU0007247243, Reuters: KLNA.RTS) ("KALINA") announced that the Call-Option Agreement as concluded with Dr. Hans-Ulrich Scheller on December 24, 2004, became effective on March 18, 2005. The minimum acceptance threshold of 16% of the share capital of Dr. Scheller Cosmetics AG (ISIN DE0007201303 / WKN 720 130) ("Scheller") plus one (1) share, which served as a condition precedent for the Public Takeover Offer was achieved. Thus, the condition precedent for the Call-Option Agreement occurred as well. As of March 18, 12:45 a.m. CET, the Public Takeover Offer was accepted for a total of 1,380,384 shares of Scheller, i.e. approximately 21.23668% of the share capital and voting rights of Scheller. On March 18, 2005, after effectiveness of the Call-Option Agreement, KALINA has already exercised the Call-Option in writing for a total of 585,000 shares, i.e. 9% of the share capital and voting rights of Scheller. After acquisition of the shares which are covered by said Call-Option, KALINA will hold approximately 30.23668% of the share capital and voting rights of Scheller.
United Financial Group (UFG) acts as the sole financial advisor to KALINA on the Public Takeover Offer. 
The takeover offer document (Angebotsunterlage) in German for the Public Takeover Offer was published on February 4, 2005 under poffer. The acceptance period of the Public Takeover Offer for shareholders of Scheller lapsed on March 18, 2005, 12 p.m. CET.
The acquisition of a minority stake in Scheller is part of KALINA's strategic expansion program. Once the Public Takeover Offer is completely executed, the equity stake in Scheller will help KALINA to develop its already established premium skin care and oral hygiene lines as well as facilitating its expansion into new markets, including decorative cosmetics and problem skin care product lines.
Scheller's existing brands, Manhattan, Manhattan Clearface, Apotheker Scheller premium skin care products and Durodont oral hygiene lines lead the list of products KALINA believes will drive this successful expansion. Launched in 1964, Manhattan is one of the oldest and most successful decorative cosmetic brands targeted at women between 14 and 29 in Germany. AC Nielsen ranks Manhattan the number 2 brand in Germany for 2003, second only to multi-national Maybelline. Manhattan and Apotheker Scheller brands have also established strong brand recognition in the CIS region.
Commenting on the recent developments, Timur Goryayev, CEO of KALINA said: "We contemplated to use the proceeds of our IPO to acquire strong synergetic brand names at an acceptable price, which will add value for our shareholders. We see high growth potential for decorative cosmetics and premium skin care lines in the CIS region. Our cooperation with Scheller regarding its premium skin care brand, Apotheker Scheller and decorative cosmetics brand Manhattan will enable us to participate in these high growth markets and better utilise our distribution network; while minimising the risks associated with entering new markets."

Alexander Petrov, CFO of KALINA continued: "Upon execution, the acquisition of the minority stake in Scheller will create an ideal strategic fit with our existing business lines. We look forward to the creation of revenue synergies through cross-selling and the maximization of existing distribution networks and sales channels. We do not anticipate any up-front costs arising from the cooperation of the two businesses, which will significantly reduce the overall risks of the transaction. We believe that the high market potential ofScheller's brands, combined with KALINA's already established extensive CIS distribution network creates a strong upside for our revenue and margin growth.

FOR MORE INFORMATION PLEASE CONTACT:
OJSC Concern "KALINA"
Public Relations
Sergey Kazantsev
e-mail: pressa@kalina.org
tel./fax: +7 343 365 83 06

United Financial Group:
Victoria Lazareva, vlazareva@ufg.com
Stephen Polakoff, spolakoff@ufg.com
Julia Zhdanova, jzhdanova@ufg.com
tel.: 095 725 2647; fax: 095 725 2647.