New transportation routes connecting Europe and Asia

In recent years the idea of the “Silk Road” has become more essential as a result of economic life center dislocation to Asia. Today this idea shapes up as a “New Silk Road” conception, advanced by the PRC Chairman as early as in 2013 under the slogan “One belt – one road”.  Therefore among the key topics discussed during the Astana economic forum held in Kazakhstan on May 25th -26th, 2016 there was not only establishment of economic affairs along the “Silk Road” but also construction of well-balanced economies in the Central Asian countries, developing on the basis of knowledge, innovations, creations of free-trade zones.     

The global strategy, including the projects “Economic belt of the Silk Road” and “Sea Silk Road of the XXI century”, intends the implementation of the scale plan of transportation infrastructure construction: rail and auto roads, pipelines, port terminals on the way from the China Western boundaries across Central Asia countries and Iran to Europe. Implementation of the project is to generate intensification of economic development of the Eurasia territories, as well as South and South-Eastern Asia, Middle East and Africa and correspondingly growth of winning trade relationships. 

In 2015 China suggested to create a joint China-Mongolia-Russia economic corridor. The main point of the corridor is to connect the Chinese idea of the Silk Road economic belt “One belt – one road” construction, Mongolian idea “Steppe road” and Russian idea of transeurasian corridor creation. In whole the conception is to include land part, comprising three rail road corridors, and the sea route. In the future the rail road corridors will be accompanied with the auto ones. It is possible that the arctic route will be introduced as well.

It is no wonder that the competition for the choice of the particular routes escalates around the abovementioned scale projects, despite unconfirmed payback of cargo transportation from China to Europe. Kazakhstan centers on construction of the gas pipeline Beinei-Bozoi-Shymkent, transit road Western Europe – Western China. Tadjikistan suggests alternative routes: supply of gas to China from Turkmenia and construction of the road from Iran to PRC. Singapore is interested in the development of sea transportations and integration of the Silk Road countries in financial sector. Estonia and Latvia got in line to offer services of cargo transshipment. Russia successfully reconstructs the Trans-Siberian Railway, which gives an opportunity to increase the freight traffic across the country, and creates transportation corridors “Primorye-1” and “Primorye-2”.

For the purposes of implementation of the “New Silk Road” conception the specific steps are taken:

  • leaders of Russia and China signed the joint statement on cooperation of countries within EEU and transeurasian trade and infrastructure projects of economic belt “Silk Road”;  
  • China created the investment fund Silk Road Company and Asian bank of infrastructure investments, where Russia has become a regular foundation-member;
  • the longest in the world freight railway route Harbin-Hamburg brought into operation across Russia;
  • on February 5th, 2016 the first container train from China arrived to Kaluga region carrying the parts for LLC Samsung Electronics Rus Kaluga;
  • in the same month a new railway route between Harbin and Yekaterinburg was opened.

Participation of Russia in the “New Silk Road” project allows the increase of the freight transit growth across the country. It will contribute to the increase of transportation infrastructure investments’ payback, development of regions located in Asian part of Russia, strengthening of the position as a large transit country, a sort of “connecting bridge” between East and West.

The largest Russian IT-companies in terms of current liquidity ratio

Information Agency Credinform presents the ranking of Russian IT-companies. The largest companies (TOP-10), engaged in using of computing machinery and information technologies, in terms of revenue were selected according to the data from the Statistical Register for the latest available period (2014). The companies were ranged by current liquidity ratio (Table 1).

Current liquidity ratio (х) is a ratio of total working capital to short-term liabilities, it shows the funds sufficiency for repayment of debts.

The recommended value is from 1,0 to 2,0. Ratio value less than 1 demonstrates excess of short-term liabilities over current working capital.

For the most full and fair opinion about the company’s financial position, not only compliance with standard values should be taken into account, but also the whole set of financial indicators and ratios.

Table 1. Net profit, revenue, current liquidity ratio, solvency index Globas-i of the Russian largest IT-companies (TOP-10)
Name, INN, RegionNet profit of 2014, mln RUBRevenue of 2014, mln RUBRevenue of 2014 to 2013 %Current liquidity ratio, (х)Solvency index Globas-i
INN 7736207543
18 720,8 51 506,0 127 3,30 172 The highest
INN 7743001840
3 637,4 13 385,7 108 2,34 204 High
INN 7705058323
863,5 19 462,0 99 1,45 253 High
INN 7704160892
533,3 14 836,1 90 1,24 200 High
INN 7701004101
502,0 22 455,1 95 1,09 238 High
INN 7705878220
21,3 19 982,2 117 1,03 249 High
INN 7736227885
97,1 21 096,2 123 1,02 191 The highest
INN 7725624249
1 332,6 16 946,2 145 1,02 231 High
INN 7705514400
58,3 19 728,9 106 0,91 262 High
INN 7703282175
-1 612,8 14 262,1 75 0,74 300 Satisfactory

Values of the current liquidity ratio for the TOP-10 companies vary from 3,30 to 0,74. The average value of the current liquidity ratio of the 10 largest IT-companies in 2014 was 1,41 with average value 1,81 for the top-100 companies.

First two places of the ranking take LLC YANDEX and LLC MAIL.RU with current liquidity ratios exceeding the upper limit of recommended value, while working capital of the enterprises significantly exceeds short-term liabilities.

Ratios of LLC LUKOIL-INFORM and JSC NVISION GROUP are below the recommended values.

The TOP-10 companies except for JSC NVISION GROUP, ended 2014 with profit, at that LLC SAP CIS, I-TECO, JSC CROC INCORPORATED and LLC LUKOIL INFORM have value decrease in relation to the previous period.

JSC NVISION GROUP has got satisfactory solvency index Globas-i due to the available information of its participation as a defendant in debt collection arbitration proceedings, cases оf delay payment and loss in financial structure. The solvency rate of the company does not guarantee full and well-timed discharge of liabilities.

The rest 9 companies of the TOP-10 list have got the highest and high solvency index Globas-i that characterizes them as financially stable.

Picture 1. Revenue and current liquidity ratio for 2014 of the 10 largest IT-companies (TOP-10)

Picture 1. Revenue and current liquidity ratio for 2014 of the 10 largest IT-companies

Following the results of 2014, the annual total revenue of the TOP-10 companies was 84,3 bln RUB, that is almost 20% of the total revenue of the companies from the corresponding TOP-100 list. This value has 9% grown related to 2013.

Therefore, inspite of difficult economic conditions, the industry demonstrates positive dynamics. The same information confirm data of the Federal State Statistics Service (Rosstat) showing dynamics in working capital of the companies engaged in using of computing machinery and information technologies (Picture 2 and Table 2).

Picture 2. Working capital according to the type of activity (Annual value, bln RUB)

 Working capital according to the type of activity

The largest working capital have IT-companies dealing with software protection and consultancy in this sphere.

Table 2. Working capital according to the type of activity (Annual value, bln RUB)
 201020112012201320142014 to 2010, %
Software protection and consultancy in this sphere 89,6 103,7 161,0 235,6 275,0 307
Other activities connected with using of computing machinery and information technologies 51,9 60,3 124,9 132,1 170,9 329
Activities connected with development and usage of data bases and information resources, including Internet resources 63,8 50,4 79,8 105,7 123,4 193
Consultancy connected with hardware of computing machinery 19,9 56,1 32,0 45,2 63,0 317
Maintenance and repair of office and computer machinery 15,1 15,9 20,0 34,6 45,4 301
Data processing 13,8 20,0 22,4 31,6 41,7 302

The highest rate of working capital have the IT-companies carrying on other activities connected with using of computing machinery and information technologies.

High business concentration in Moscow – the largest financial center in the country – is typical for IT-companies. This fact is confirmed by the data from the Information and analytical system Globas-i on the regional distribution of 100 largest registered companies of the industry in terms of 2014 revenue (TOP-5 Regions):

RegionNumber of registered companies
Moscow 74
Saint-Petersburg 6
Moscow region 5
The Republic of Tatarstan 3
Rostov region 2