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Corporate Standards for Management of the Property Complex Print version

Tye standard is aimed at improvement of the management efficiency of the TATNEFT Group property complex and ensuring transparency of and control over asset transactions and real property businesses:

Standard for Property Leasing

The standard ensures a uniform policy for leasing relations in the TATNEFT Group in terms of determination of basic rates of lease payments for the leased property, which allows a significant reduction in expenses for upkeep of the Group’s property complex and obtaining additional profit from the property leasing.

The amount of RUR 1.57 billion was received as a result of lease payments in 2007. Profit from leased property amounted to RUR 375 million.

Standard for Property Sales

The standard ensures the sequence and transparency of procedures for realization of non-used property, as well as control over assignment of assets of the TATNEFT Group.

The non-used property selling yielded the amount of RUR 2,04 billion in 2007.

Standard for Property Conservation

The standard defines a uniform procedure for formation, correction, and evaluation of fulfillment of the normative value for critical circulating funds (CCF) in the structural subdivisions and affiliate companies of the TATNEFT Group.

Creation of centers for conservation of the equipment and vehicles allowed minimization of expenses for non-used property and creation of additional investment reserves.

The property for the amount of RUR 700 million was conserved in 2007. Reduction of costs for its upkeeping due to conservation made RUR 60 million.

Standard of Methods for Establishing Normative Values for Critical Circulating Funds

The objective of the normative value establishment is to reduce risks for inventory management, i.e.: reduction in diversion of funds to inventory, prevention of formation of unclaimed and non-marketable residues of inventory items, increase in the assets profitability, and, subsequently, financial sustainability of the Company.

As of December 31, 2007, 30 structural subdivisions and 9 affiliate companies of OAO Tatneft were covered by normalization.
Control over fulfillment of the Standard is ensured by the Economic Department together with the Norms Analyzing Center of OAO TATNEFT

The normative value of critical circulating funds in OAO TATNEFT is established quarterly and represents the planned residues of inventory items (feedstock and materials, non-completed construction, finished products) as for the reported date acc. to the accounting balance-sheet.

During the quarter, the financial and economic services and material support subdivisions monitor fulfillment of the normative value. In case of objective reasons (change in the planned scope of works, structural transformations of plants, etc.), an up and down correction of the normative value is possible.

Evaluation of actual fulfillment of the normative value for critical circulating funds is performed quarterly after submission of accounting balance-sheets. In case of exceeding the normative value or significant saving (including that with respect to separate elements of the normative value), the plants submit explanations for reasons of deviation.

The normative value of critical circulating funds is one of the main indicators of Order No. 1; accountability for its fulfillment is regulated by section "Disciplinary & material responsibility for violations of executive discipline in the area of finance" of the Corporate Code of OAO TATNEFT and "Standard for corporate relations of OAO TATNEFT and its affiliate and associated companies in the area of finance".

The Standard introduction resulted in reduction of stock reserves of OAO TATNEFT.

The inventory of the Company was reduced by RUR 2.5 million, during the period of seven years (2001 – 2007), including the amount of RUR 187 million within 2007.

Reduction of the inventory in the comparable prices (with allowance for inflation) for the same period amounted to RUR 8,9 billion.

The chart illustrates the economic effect from reduction of inventory at OAO TATNEFT during 2001 – 2007, determined by the sum of saving interest on the credit to replenish current assets. The aggregate economic effect from reduction of inventory amounted to over RUR 1,2 billion during the period of 2001 – 2007 makes including the amount of RUR 204 million for 2007.

The work for introduction of the Standard for material support and the Standard for centralized delivery of materials in structural subdivisions and affiliate companies by the Tatneftesnab Department also contributed to reduction of stock reserves.

Print version