Zil
Zil is a major truck and limousine manufacturer based in Moscow. Zil employs more than 100,000 workers and used to produce up to 200,000 vehicles a year. Its main customers were traditionally the military and the agro-industrial complex.
According to the Zil privatization plan, adopted in Dec. 1992, enterprise employees received 40% of its shares, 166 managers received a total of 5% of shares, 35% of shares were to be sold at auction, and the remaining 20% of shares were divided between the Moscow Property Fund and the Company Workers Reserve Fund.
In March 1993 about 15% of Zil shares were put up for sale at the first Russian inter-regional voucher auction, with tenders taking place in 15 cities simultaneously. In June 1993 about 5% of shares were sold at a national cash auction.
Eventually 26% of all shares (35% of voting shares) were concentrated in the hands of Microdin Trading Company, which became the single largest Zil shareholder. Microdin spent about $5 million dollars for its stake. Microdin did not take an active role in Zil's management until the beginning of 1995, when it became clear that the enterprise's financial position was deteriorating rapidly and enterprise managers were intending to place Zil into a financial-industrial group with UNEXIM Bank. Microdin publicly assessed these plans as an "irresponsible redistribution of ownership rights".
In Spring, 1995, the A Yefanov, the Chairman of Microdin's Board of Directors, took the post of President/Director General of Zil. He predecessor, V. Saykin, kept the position of Chairman of the Enterprise Council. In January 1996 the Enterprise Council voted Yefanov out of his office.
When Yefanov became President/Director General in the Spring of 1995, new restructuring plans were implemented. Financial and marketing problems were given particular attention. In March 1995, Resurs Bank, controlled by Microdin, opened a R55 billion credit line for Zil. New measures were instituted to stop widespread stealing of materials from the factory.
Despite these efforts, the enterprise's position continued to deteriorate. While the target output for 1995 was 47000 vehicles, only 12000 vehicles were produced. Debt to Resurs Bank grow to R150 billion by the end of 1995. The relationship between the new owners and the old management became infused with hostility.
Company-Government Relations
Zil's restructuring efforts have attracted high-level government attention. In January 1995 the Russian government issued a decree on state aid to Zil, the Moscow government issued a similar decree in August 1995, and in October 1995 President Yeltsin issued a special decree on the project of beginning light-duty truck production at Zil. Zil was allowed to compete for government investments in its commercial projects provided that it mobilized no less than 60% of the needed funds on its own.
Enterprise Restructuring in the FSU