Kronshtadt Group is a Russian high-tech company that engineers and manufactures knowledge-intensive products and solutions for the production, deployment, and safe use of sophisticated air, sea, and land-based systems. The Group's substantial intellectual and engineering potential, its portfolio of key technologies and competences and state-of-the-art manufacturing resources enable it to create high-tech products and solutions that are in demand in Russia and are also able to successfully compete on international markets. Sistema's equity holding in Kronshtadt is 100%.
In 2016, Kronshtadt Group successfully completed work under some key government contracts, including supply of correcting stations for the differential sub-system of the GLONASS/GPS global navigation satellite system, 18 module Kamaz-5350 driving simulators with a motion generation system and 14 sets of electronic conduct-of-fire trainers for the schools and training centres of the Russian Defence Ministry. Kronshtadt developed and supplied to a foreign customer a full flight simulator for the state-of-the-art transport and combat helicopter Mi-35M designed for efficient training of flight crews. In addition to contracts with the Defence Ministry, the Group successfully completed its share of work in the large-scale reconstruction of the Aurora cruiser, which was one of the company's most important projects in 2016. After Sistema acquired Kronshtadt in 2015, the Group sold all non-core assets, shut down loss-making projects, signed new long-term contracts and entered new markets
Concept Group has been active in the Russian market for over 10 years and is a leader in the segment of women's and children's fashion and underwear. The company has two own retail chains under the brands Acoola and Concept Club with an aggregate of over 400 stores, many of which are franchised. Concept Group operates under a multi-brand and multi-channel business model, which ensures stable revenue growth due to the diversification of proceeds. A professional team of fashion designers located in the company's head office in St Petersburg is in charge of developing collections for all brands of the Group. Manufacturing takes place at partner factories in China, Bangladesh, Uzbekistan, India, Russia and Kyrgyzstan, with mandatory quality control.
In 2016, Concept Group developed and launched production of two new wholesale brands of children's clothing - Maloo for babies and toddlers and Overmoon for children under 12. It also developed an exclusive baby clothes brand for Detsky Mir. Sales of the new brands will start in 2017. In 2016, Concept Group expanded the geography of its manufacturing, adding factories of Kyrgyzstan to its suppliers' list. At the same time, the share of supply from India grew from 1.6% in 2015 to 8.3% and from Russia from 0.4% to 2%. Acoola and Concept Club stores are present in over 120 cities of Russia; the total number of stores is 432, out of which 60% are owned by the company and 40% are franchised. As of the end of 2016, the Acoola chain comprised 234 stores, out of which 163 were owned by the company. The Concept Club chain comprised 198 stores, including 98 own stores. In 2017-2019, the Group plans to continue active development of the Acoola chain, investing in opening 20-30 stores per year. Concept Group's revenue in 2016 amounted to RUB 10.9bn
Sistema Shyam TeleServices Ltd.
In November 2015, Sistema signed binding documents to merge its Indian telecom business with Reliance Communications Ltd (RCom), one of India's biggest telecom operators. The deal structure has been approved by Indian courts and envisages a demerger of the telecom business from Sistema Shyam TeleServices Ltd. (SSTL) to be further merged with RCom under the RCom brand, with SSTL holding 10% of the combined company. After closing, SSTL's minority shareholders may exchange their shares in SSTL for shares in RCom pro rata to their interests in SSTL pre-closing. In Q4 2015, Sistema refinanced SSTL's debt guaranteed by the Corporate Centre.
In June 2016, Sistema acquired a 17.14% stake in SSTL from the Federal Agency for State Property Management. It will pay for the shares to the Russian federal budget during the next 5 years in accordance with the following schedule: 30% of the amount - in 2016, 25% - in 2017 and 15% in 2018, 2019 and 2020.
In 2016, Sistema and RCom continued work on merging SSTL's telecom business with RCom. The deal was approved by India's two main exchanges (the National Stock Exchange and the Bombay Stock Exchange), the Securities and Exchange Board of India, the Competition Commission and the High Courts of Rajasthan and Mumbai. All necessary approvals from the shareholders and creditors were obtained. Sistema and RCom continue talks with the Department of Telecommunications and other regulators and judicial authorities of India with regard to final terms of the potential deal. The decisions on closing the transaction will depend on the approval timeframe and the final terms.