The Russia Journal U.S. firm to take stake in Russian tech company

U.S. firm to take stake in Russian tech company

U.S. high-tech company Symix tentatively agreed to purchase a 20 percent stake in Socap, a Russian-owned software enterprise based in Moscow, Socap General Director Maria Ilyina said. 
Ilyina said the value of the deal would be announced soon after the sides finalize the agreement, expected before the end of March 2001. 

"The deal will be the culmination of more than five years of cooperation between Symix and Socap," said Ilyina. She added that Socap has been providing Ohio-based Symix's manufacturing information system (MIS) to domestic industrial plants and factories since 1995. 

Socap was established in 1993 by four Russians, including Ilyina, who started up in the technology sector after the start of the Perestroika era. Ilyina said she and her partners gained their first business experience while working at Interquadro - an Italian-Soviet-French joint-stock venture that was the first company of its kind operating in the high-tech field in the former Soviet Union. 
"We were responsible for supplying Interquadro's clients with a manufacturing information system created by France-based Socap, [an unrelated] high-tech company," said Ilyina. 
MIS solutions consist of software programs that help factory and assembly-line activities operate efficiently. 

In the early 1990s, Ilyina and her co-workers realized that providing automated systems could be a lucrative business in Russia. They left Interquadro and then asked and received permission from the French company to use the Socap name in a new venture. Officials said that there is no financial connection between the French and Russian Socap entities.

"From the outset, we provided technologies developed by the French Socap," said Ilyina, adding that her firm managed to survive thanks to orders from Omsk petroleum-refining plants, the Mikhailovsky ore mining and processing enterprise and the Novovoronezhskaya nuclear power station. Each enterprise agreed to Ilyina's business offer to modernize their automatic system controls. 

In 1995, the company, which previously had dealt only with large plants, switched its focus to midsized industrial companies and started providing products created by U.S. Symix Systems Inc. 
"We watched many Western high-tech companies and finally decided on Symix as a rapidly developing company," said Ilyina. She said her business contacts in France helped her organize cooperation with Symix. She added that Symix would play a part in the company's marketing policy and financial management, which would be brought into accordance with Symix corporate practices. 

To date, Socap has equipped 16 industrial enterprises with MIS. Last December, the company started cooperation with three more businesses - Salavatsteklo (Bashkortostan-based glass-making factory), Russky Produkt (Moscow-based food industry holding) and the Koryenevsky low-voltage gear plant in the Kursk Oblast. 

Socap officials said they foresee growth in the near future since domestic industrial enterprises are in need of improving their technical equipment in order to stay in business, said Ilyina. 
"At last, Russian companies have stopped being afraid of the rather high prices of MIS systems and have started to regard the purchasing of modern MIS as a part of their investment outlay," she said. 
"The cost of the software and services that come with MIS depends on the needs of the enterprise and may vary from $50,000 to $200,000," Ilyina said. 

She cited the Koryenevsky low-voltage gear producer, which purchased a new APM system in 2000, as an example of rising interest in Socap service. "The plant, based in Koryenevo, a remote town in Kursk Oblast, had found funds to set up a modern high-tech managing system," she said. 

"Socap's system decreases plant expenditures by 20 percent and makes the production cycle easier to manage," the general director of the Koryenevsky plant, Sergei Rukhlin said. He preferred not to mention the deals' value, but he said that he plans to cooperate with Socap in the future in order to improve the system continually.

"For the first time, companies usually purchase a part of the manufacturing information system and then enterprises complete the system during a year or two," said Ilyina. 

She said Socap focuses on enterprises operating in woodworking, packaging, machinery, printing and metal industries. Ilyina refused to divulge company turnover and revenues, but she said these figures are several times lower in comparison with European firms dealing with Symix. 
She said the Socap business plan proposed for the next three years aims to increase profits to the European level. 
Currently, Socap has 40 employees - about double the number of workers that the company had before August 1998.

Vyacheslav Kuzmin (01.01.2001)