“Ural Steel” Safina got into debt

The day before, Denis Skrobotov, financial director of Ural Steel, did his best, talking about the advantages of his native enterprise. And this is not surprising. After all, Denis Safin, who owns the company and at the same time is the owner of the Zagorsk Pipe Plant (ZTZ), needs at all costs to “knock out” 5 billion rubles from potential investors.

Skrobotov’s arguments seem to be convincing. Convincing for the slogans of the times of the USSR. One of the main ones is that the Ural Steel Iron and Steel Works will increase the supply of pig iron to international markets in 2023 – and not just increase, but almost double them, to 1.8 million tons.

What is true and what is not in the business of the “pipe king” was sorted out by The Moscow Post correspondent in the Orenburg region.

Apparently, located in the Orenburg region, Ural Steel, like its owner Safin now, may be favored by local authorities headed by Governor Denis Pasler. Last summer, the latter was just present at the start of construction of a new pipe-rolling shop at Ural Steel, after the asset was transferred to Denis Safin.

Finance down the drain

The new workshop requires multimillion-dollar investments. The project itself should show investors that Safin’s company is developing. However, money for the implementation of the project, apparently, will have to be asked from them.

In April 2023, it became known that Ural Steel plans to collect applications for three-year bonds worth at least 5 billion rubles. And this is not the first time – in December 2022, there was a placement of bonds for 10 billion rubles. At the same time, the value of the assets of JSC “Ural Steel” is estimated at 42 billion rubles. – it turns out that he needs at least a quarter of the value of his own company to show growth.

However, with such assets, Ural Steel also turned out to be a big debtor. Today, the company’s debts amount to almost 38 billion rubles.

Please note that this is written by investors themselves who are afraid to be left without their money.

At the same time, if revenue grew slightly in 2022, then the company’s profit began to decline even taking into account the state contracts of the enterprise. And this is also a wake-up call for investors.

The latest data on the debts of “Ural Steel” are given, apparently, taking into account the placement of last year’s bonds. Thus, if Safin re-places bonds, the JSC’s debt may exceed the value of net assets, and then completely go into negative. Therefore, the anxiety of investors is quite understandable.

At the same time, JSC debts are constantly growing. Of course, this was still under Usmanov. However, if at the end of 2021 the debt amounted to 34 billion rubles, then a year later, as already mentioned, almost 38 billion. The reverse trend is not observed.

In addition, over the past few years, JSCs have had problems with the profitability of sales, equity and assets. Only in 2021, the “pre-sanctions” year, the indicators somewhat leveled off. Now we can expect another fall – after all, a company that is confidently standing on its feet is unlikely to issue several bond issues per quarter.

At the same time, Safin is already living on credit money. Back in 2019, he agreed on a loan of 35 billion rubles for ZTZ at the state-owned VTB Bank. The money turned out to be needed for the construction of the production of seamless pipes. It is precisely such pipes, apparently, that will be produced in the new workshop of Ural Steel.

But there have already been alarm bells for Mr. Safin. His ZTZ received a subsidy of 133 million rubles from the Ministry of Industry and Trade, which could go, as they say, “to the left.” In 2017, Safin was even placed under house arrest in connection with this situation, RBC wrote about this.

Safin himself stated that the amount was used to repay another loan to Sberbank. And as if he returned the money that he took from the state. As a result, the criminal case was closed, and Denis Safin was released from arrest. Moreover, the bank suddenly restructured Safin’s debt and postponed payments on it. And ZTZ was credited with a “bonus” for another billion rubles.

Then there were rumors that the aforementioned Nikolai Yegorov could intervene in the situation with his connections. Whether he will help out again in the event of a similar situation is a question.

By the way, these subsidies, like other revenues to the Safinian business, may not end up in Russia. The offshore ZTZ HOLDING LIMITED is easily located in the Register of Legal Entities of Cyprus – apparently, the management company of the entire ZTZ holding. Its leader is Denis Safin personally. So isn’t that where credits can leak? At the same time, for some reason, Mr. Safin’s sanctions are not taken, no one in the West cuts off his oxygen, which in itself raises questions.

Those. Safin’s business may be offshore. At the same time, his ZTZ remains one of the largest suppliers of pipes for domestic state monopolies, the same Gazprom.

The total amount of ZTZ government contracts exceeds 12 billion rubles. At the same time, at the end of 2021, with all its investment plans, the plant brought a net loss of 1.5 billion rubles. At the same time, the value of the plant’s assets fell by a quarter over the year.

According to open sources, the plant has risks both in terms of financial stability and solvency. And the efficiency of the enterprise is recognized as low. Perhaps, under Safin, things will turn out in a similar way for Ural Steel.

Market for yourself

A separate question is what will be the quality of Safin’s products at Ural Steel. Because earlier similar questions had already arisen to his ZTZ. And, first of all, those market players who were left without contracts of the same Gazprom, having been present on the market for a long time.

It even came to the idea of ​​creating a single operator for organizing tenders for the supply of pipes for Gazprom, which was proposed by the Pipe Industry Development Fund. This is done, it seems, to reason with ZTZ.

The market remembers the situation with the supply of pipes for the now infamous Nord Stream 2. In the same year 2016, it was assumed that the tender for the supply of large-diameter pipes for the project would be divided between the enterprises of OMK, TIT, ChTPZ, TMK, and the Izhora Pipe Plant of Severstal.

However, ZTZ Safin offered a huge discount – up to 15% of the cost. As a result, the contract was given to him. And many other subsequent – too. The question arises – why could Mr. Safin withstand such low prices?

“Rotten” pipes?

This is where the suggestion of counterfeiting comes in. In this context, Safin was reminded of the scandal with the construction of an oil pipeline in Ust-Luga in the Leningrad region, which Transneft was engaged in.

The pipes were supplied by Industrial Technologies. As Versiya wrote, the pipes were used, they only removed rust and old insulation, eliminated defects and glued fake markings.

This was done by the Insulation Pipe Plant (ITZ, Rzhev), at that time a subsidiary of the Zagorsk Pipe Plant.

That scam was uncovered, the amount of damage amounted to 4.5 billion rubles, but the Industrial Technologies company, and not the Insulation Pipe Plant or ZTZ, became the defendant in the case. Neither for Safin nor for his partners in the end, no problems arose.

In 2018, Denis Safin sold ITZ to a little-known Sergey Frolov, for whom today there are no other businesses. At the same time, ITZ itself ended up in the liquidation procedure. In recent years, he does not conduct any financial activities. Doesn’t the same fate await Ural Steel?

Thus, one gets the impression that Mr. Safin is strenuously putting a good face on a bad game – a large amount of debt and the threat of losing credit resources in the future. At the same time, money can settle offshore, and the entrepreneur himself does not even think about the quality of his products.