Izhmash Officially Bankrupt

I reported back in 2009 that Russian state-owned arms maker Izhmash, manufacturer of the AK-xx and Saiga rifles, was facing bankruptcy. The company is now officially bankrupt (Google translation follows) …

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The claim of bankruptcy “Izhmash” gave the company “Izhstanko”, which concern owes 814,000 rubles. The procedure for external monitoring was introduced in the company in August 2011. The court bankruptcy manager “Izhmash” appointed member of the non-profit partnership “Moscow professional self-regulating organization of arbitration managers’ Artem Kuznetsov.

During 2011 net loss “Izhmash” was 2.43 billion rubles. During the year production at the company fell by 45.5 percent to 1.7 billion rubles. Group revenue grew by almost 1.7 times to 3.13 billion rubles, while production costs increased by 1.5 times.

The growth of production of sports and hunting weapons is almost four times (up to half a billion rubles) has not helped the company make a profit. On January 1, 2012 payable “Izhmash” amounted to 5.3 billion rubles, of 2010 it grew by 19.5 percent. Debts of the enterprise customers, by contrast, fell by 15.2 percent to 2.7 billion rubles.

The new Izhmash АК-12

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By the sounds of it the company needs to be reorganized from a WWII/cold-war weapon mass production manufacturer to a modern sporting goods manufacturer that does defense contracts on the side. $179 million USD of sporting good sales is nothing to scoff at.

Unfortunately I believe that the Russian government will bail them out and the old dinosaur will continue to focus on the more sexy, but shrinking, market for its AK rifles and continue to use dubious strong arm tactics to force companies to pay royalties for a 70 year old design.