Five industry research and production holdings to be formed during Ukroboronprom's transformation - company head

MOSCOW. April 5 (Interfax) - The target model of Ukraine's new defense holding, which is being formed via the transformation of the Ukroboronprom state-owned company, is a small corporate center into which Ukroboronprom itself and industry holdings will turn now, the company's general director Yury Gusev said.

"We plan that 63 enterprises will become the backbone for five industry research and production associations dedicated to armored hardware, aircraft repair, precision-guided weapons and munitions, radar systems, and maritime systems. And all this should be in a completely new format - in line with the corporate governance principles of the Organization for Economic Cooperation and Development and [in line with] NATO standards," Gusev said in an interview with Ukrainian media.

Given the development of the unmanned aerial vehicle sector, it may become a separate holding and a separate track of cooperation with private manufacturers that operate successfully, he said.

Taking into account one new enterprises, the group currently consists of 119 companies, Gusev said. Three enterprises, two of them temporarily, were transferred to the Defense Ministry for the period of the crisis.

"These are enterprises that procure weapons on foreign markets," he said.

Some enterprises will not be included in industry holdings (for instance, special exporters) and will be directly subordinate to the corporate center, Gusev said.

The model of Ukroboronprom's transformation into a modern defense company will be regulated by a separate law, which Ukrainian President Vladimir Zelensky signed in October 2021, as well as by the government's March 21 decision on the establishment of JSC Ukrainian Defense Industry through the reorganization of the Ukroboronprom state-owned company.

"It is a management company which belongs to the state. Next, the corporate center owns industry holdings, which, in turn, hold stakes in manufacturing enterprises in the form of limited liability companies," Gusev said.

Ukroboronprom has reorganized 28 state-owned enterprises into limited liability companies over a little more than a year, he said.

The form of a joint-stock company has been chosen for Ukrainian Defense Industry, on one hand, in order to comply with corporate governance standards and, on the other hand, with the aim of becoming a partner for international companies with which Ukroboronprom started to actively cooperate even before the crisis, Gusev said.