Coverage ratio of the largest car manufacturers in Russia

Information agency Credinform has prepared a ranking of the largest Russian car manufacturers.  

The TOP-10 list of enterprises was drawn up for the ranking in terms of revenue, according to the data from the Statistical Register for the latest available period (for the year 2014). Revenue trend data relative to previous period and coverage ratio are also represented (see table 1).

Coverage ratio (х) is the proportion of the company`s current assets to short-term liabilities. It shows funds adequacy of enterprise for repayment of short-term liabilities. 

Recommended value: from 2,0 to 3,0. If index is less than 1, that demonstrates that short-term liabilities excess current assets. 

For getting of the most comprehensive and fair picture of the financial standing of an enterprise it is necessary to pay attention not only to the average figures in the industry, but also to all presented combination of financial indicators and company’s ratios.

Table 1. Turnover, annual turnover growth, coverage ratio and solvency index of GLOBAS-i® of the largest car manufacturers in Russia (Top-10)
NameRegionTurnover, mlnRUB, 2014Turnovergrowthto 2013, %Coverage ratio, (х)Solvency  index of GLOBAS-i®   
1 LLC Volkswagen Group Rus
INN 5042059767
Kaluga Oblast 230 583 -4,4 0,7 282 high
INN 6320002223
Samara Oblast 189 370 8,1 0,6 295 high
3 LLC Nissan Manufacturing Rus
INN 7842337791
Saint-Petersburg 152 033 21,8 1,2 269 high
4 CJC Renault Russia
INN 7709259743
Moscow 110 592 4,4 1,0 223 high
INN 1650032058
 Republic of Tatarstan 104 389 -2,6 1,3 252 high
6 LLC Ellada Intertrade
INN 3906072056
Kaliningrad Oblast 91 640 15,8 1,0 228 high
7 LLC Hyundai Motor Manufacturing Rus
INN 7801463902
Saint-Petersburg 85 392 7,1 2,0 219 high
8 LLC Automobile Plant Gaz
INN 5250018433
Nizhny Novgorod Oblast 59 278 -13,9 0,8 302 satisfying
9 LLC Ford Sollers Holding
INN 1646021952
Republic of Tatarstan 54 888 -34,7 0,8 327 satisfying
10 CJC Autotor
INN 3905011678
Kaliningrad Oblast 40 967 -4,4 0,8 290 high
Coverage ratio index for all market leaders, excluding LLC Hyundai Motor Manufacturing Rus, does not correspond to recommended low border of acceptable interval (<2,0) that shows high proportion of short-term liabilities. 
Several companies have coverage ratio lower than 1 - short-term liabilities exceed current assets that significantly raise financial instability risks.

turnover and coverage ratio of the largest car manufacturers in Russia

Picture 1. Turnover and coverage ratio of the largest car manufacturers in Russia (Top-10)
Annual turnover of companies from Top-10 list at year-end 2014 was 1119 bln RUB that is «just» 0,9% higher than total index of the same automobile manufacturers for the previous period. Regarding grown inflation the industry shows negative dynamics. 
Turnover of some companies completely reduced:  LLC Ford Sollers Holding (-34,4%); LLC Automobile Plant Gaz (-13,9%); LLC Volkswagen Group Rus (-4,4%); CJC Autotor (-4,4%); PAO KamAZ (-2,6%).
Sales of new light vehicles (without commercial low-tonnage autos) at year-end 2015 will amount 1,5 mln items, that is 37% lower than results of 2014 (according to «Autostat»).
Market of commercial autos at year-end will reduce much more: in light commercial vehicles (LCV) segment in 2015 about 105 thousand vehicles will be sold that is 31% less than result of 2014. 
Market of used light vehicles at year-end 2015 will reduce to 5 mln items that is 18% lower than results of 2014. It is possible that part of new light vehicles consumers will chose used light vehicles. Volume of used light vehicles market in 2016 will be about 4,8-5,5 mln items.
Average price for automobile for 9 months of 2015 was about 1169 th RUB that is 18% higher than the same index for the previous year.
Significant support for industry gave state programs, providing, according to the Ministry of Industry and Trade of the Russian Federation, about 38% of sales. Following the results of 2015 volume of sales as part of programs of demand motivation – fleet renewal programs, privileged/beneficiary automobile leasing – made 453,6 thousand automobiles.
Even under the best circumstances sales of new light vehicles in 2016 do not exceed 1,6 mln items, in the worst case scenario reduction of sales to 1,3 mln can be expected. Government realizes the importance of automobile industry for economic development and will not stand off:  «Russian government made a decision to increase support of car industry», - said on January 15, 2016 the prime minister of the RF Dmitry Medvedev.
Voluntary declaration of assets and bank accounts by private persons is prolonged

In our publication as of August 21, 2015 «New In Doing Business: Law And Realities» we mentioned the law on capital amnesty. Today we are going to dwell upon this legal act.

The Federal law of the Russian Federation as of June 8th, 2015 № 140-FZ «On voluntary declaration of assets and bank accounts (deposits) by natural persons and on introducing amendments to certain legislative acts of the Russian Federation» passed by the State Duma as of May 22nd, 2015 offered Russian citizens to declare from July 1st to December 31st, 2015 the foreign property, bank accounts, securities and stocks in the capital of foreign companies, on which the citizens gain income. In this respect the citizens are given guarantees to provide exemption from tax and criminal liabilities, if the deals related to foreign income were concluded before January 1st, 2015 within the property stated in the declaration. Declaration and guarantee procedures are documented by the law.

However, according to experts, law execution practice shows that the declaration procedures appeared to be very complicated and the guarantees – insufficient. Due to this only about 200 corresponding declarations were filed for the first half of the year of the law operation. At the same time several dozens of the cases of holding Russian citizens’ abroad accounts on the ground of check of their origin became known. Probably it was made in order to prevent financial assets from returning to Russia.

It was the proposal of the Association of Regional Banks to prolong the capital amnesty and the President of the Russian Federation proposed to extend the period for another 6 months in the Address to the Federal Assembly in December 2015. As a result as of December 22nd the State Duma passed the law at once in three readings № 401-FZ «On introducing amendments to article 5 of the Federal law «On voluntary declaration of assets and bank accounts (deposits) by natural persons and on introducing amendments to certain legislative acts of the Russian Federation» extending the declaration term to July 1st, 2016. The law was endorsed by the President of the Russian Federation as of December 29th and published in «Rossiskaya gazeta» as of December 31st, 2015.