Region at Glance

Region at Glance

0 – Moscow-3 – GMT

Time difference:

3.35 mln. peoplePopulation:

Nizhny NovgorodCapital of the region andPrivolzhsky federal district(14 regions)

76 600 sq. km. Area:

Geographical position: Centre of the European part of RussiaDistance from Moscow – 400 km

RUSSIA

MoscowNizhny Novgorod Region

UNESCO included the city of Nizhny Novgorod in the list of 100 cities of the world’s historical and cultural heritage

Automotive industry

IT

Petro-chemical industry

FMCG production and distribution

Science and education

Strategic Priorities

Regional Development Strategy up to 2020

Competitive Advantages

Unique geographical position

Well-qualified human resources

Manufacture skills and traditions

Centre of research and development

Comfortable business environment

Regional investment policy

Economy in Figures 2009 vs.2004GRP growth rate:

Foreign trade turnover growth:

Foreign investment growth:

219,2%

224,6%

327,9%

Components of GRP

Structure of Industry

1,5%

14,6%

19%

54,1%

63,1%

98%

0 10 20 30 40 50 60 70 80 90 100

Tempered glass

Autobuses

Commercial lorries

Steel tubes

Newsprintpaper

Passenger cars

Region Share in Russian’s Output

Foreign Investors FIATSeverstal

Freudenberg

OMK

LiebherrProcter&Gambl

eKnauf

DanfossLanxess

A.RaymondA.S.Creation

BranoCIEB

Saint-GobainIngersol-Rand

Intel

RettenmaierLugas

Saint-Gobain, Stora Enso

SolvayBASFSiburLukoilValeo

IntelCoca ColaHeinekenOndulineKnorr-BremseStadaBaselGAZ

Asahi GroupEurope FoodsSchottCaterpillarTrosifolBericap

Competitive Advantages

NIZHNYNOVGOROD

Russia’s CrossroadCROSSROAD OF INTERNATIONAL TRANSPORTATIONCORRIDORS EU TEN №2 & “NORTH – SOUTH”

MOSCOWMINSK

WARSAWBERLIN

VLADIVOSTOK

EKATERINBURG

TEGERAN

HELSINKI

ST.PETERSBURG

Transport Infrastructure

More than 12 thousand km of highways with the density 5 times higher than the

average in Russia1300 km of railroad with the triple density as compared with the Russia’s

averageNizhny Novgorod – Moscow – Saint-Petersburg via “Sapsan”Federal logistic centre (1 out of 11) with container facilities by Russian

Railways (RZD) up to 2014

River ports and about 900 km of water waysWater connection with the Baltic, White, Azov, Black, Caspian Sees

International airport to be reconstructed up to 20163 hours duration regular flight “Nizhny Novgorod – Frankfurt/Main

(Germany)”– 5 times per week

Largest Consumer Market in Russia

508184,3Within 1000 km zone

244143Within 500 km zone

Saint – Petersburg

MoscowNizhny

NovgorodDistance

Number of inhabitants, mln.

Access to OEMs and Autocomponents’ Market

Nizhny Novgorod

Level of unemployment

14,3 13,311,1

14,1

36

0,79 0,74 0,61 0,79 1,98

0

5

10

15

20

25

30

35

40

2005 2006 2007 2008 2009

Number of unemployed, thos Level of unemployment, %

Education, R&D and Employment

18 higher schools and universities 99 trade and polytechnic collages 190 thousand of students in 2008/2009 228 foreign students in 2008/2009 Primary, secondary and higher education for foreign citizens

First Intel division in Eastern Europe was founded in Nizhny Novgorod

About 100 scientific, educational, R&D institutions and 50 thousand people engaged

Strategic research institutions: Federal Nuclear Centre, Research Institution of Measuring Systems, Institution of Applied Physics of the Russian Academy of Science, Research Institution of Radio Engineering

Investment InfrastructureInvestment council headed by the Governor of the Nizhny Novgorod Region: - Includes representatives of controlling, supervising and regulating authorities- Gives «green light» to an investment project- Determines measures of state support – priority status- Solves problems related to a project implementation

Ministry of investment policy:- Supports investors implementing investment projects in the region inlc. land site search- Gathers permissive documents - Manages activities of the Investment Council and Board of Investors of the Nizhny Novgorod

RegionBoard of Investors headed by the Governor of the Nizhny Novgorod Region : - Thematic forum for discussion with the Governor on investment projects’ implementation problems

Legislation & ProceduresFederal law:Federal law of July 9, 1999 No.160-FZ: “Foreign investment in the Russia Federation.” Nizhny Novgorod region investment law: Regional law of December 31, 2004 No180-Z: “State support for investment activity in Nizhny Novgorod region.”

Measures of State Support

-13,5%2,5%16%Incentive rate

1,5%--1,5%Land tax

0%--0%Incentive rate

1,1%1,1%-2,2%Property tax

0%0%-0%Incentive rate

-17,5%2,5%20%Profit tax

MunicipalRegionalFederal

Budget levelsTax rateTax

Financial and administrative support to be provided according to the Regional law of December 31, 2004 No180-Z: “State support for investment activity in Nizhny Novgorod region.”

Tax incentives:

Duration: 5 + 2 years

The Investor can fix the date when the incentives are put into action Documentation: Investment agreement, regional law to ratify Investment

agreementProcedure timing: apr. 4 months

DzerzhinskDzerzhinsk

Dzerzhinsk Industrial ParkArea of industrial park: 400 Ha

Distance to Moscow: 350 km to Dzerzhinsk: 9 km to Nizhny Novgorod: 5 km

Located along the Federal Highway M-7 "Volga" (Moscow - Kazan)

Nizhny Nizhny NovgorodNovgorod

Residents: Danfoss, production of heating equipmentA. Raymond, production of plastic fastenersLANXESS, production of additives for rubber industry

Dzerzhinsk Industrial ParkCategory of the land site: suitable for industrial usage and construction

Distance to the nearest residential area (buffer area): more than 500 m

Sites within the park shall be configured as per residents’ requirements

Topographic map: appendix 1

Ground analysis: appendix 2

Land site surfacing and uprooting: to be done by the authorities*

* the subject of investment agreement between Investor and the authorities: appendix 3

Dzerzhinsk Industrial Park

Land site acquisition:

Variant #2:leasing for the construction period and buy out

Cost of land rent: 110 000 RUR. per hectare per yearAverage construction period: 2 yearsDocumentation: lease contract Procedure timing: apr. 3,5 months

Buy out cost of land: 561 000 RUR. per hectare One time payment Documentation: purchase contract

Land site acquisition:

Variant #1: purchasing after tender procedure

Cost of land: 561 000 – 800 000 RUR. per hectare One time paymentDocumentation: purchase contractProcedure timing: apr. 4,5 months

Decision on the variant of land site acquisition to be made by Investor

Dzerzhinsk Industrial ParkGas supply: connection and operation costs

Connection fee: 0 RUR

Wholesale price for natural gas: 2 804 RUR per 1 000 m3Tariff for gas transfer: 380 RUR 69 kop. per 1 000 m3Extra charge on gas transfer: 55 RUR 11 kop. per 1 000 m3Extra charge for supply and sales: 77 RUR 25 kop. per 1 000 m3Total: 3217 RUR 05 kop. per 1 000 m3Total: 3217+VAT=3796 RUR 12 kop. per 1 000 m3

Annual value per 5,6 mln m3: 21 000 258 RUR*

Tariffs are regulated by Federal Tariffs Agency

*in the prices of the year 2010

Quality of gas (gas unit - 1 000 m3):temperature +200Cpressure 101,325 kPa humidity 0%calculated combustion heat 7 900 kcal/m3

Dzerzhinsk Industrial ParkElectric power supply: connection and operation costs

Connection fee: 8 900 RUR per kW excl. VAT Electricity supplier’s tariffs valid for the electricity supplying company OAO “Nizhegorodskaya Sbytovaya Company”:

1270,001050,001050,00RUR/МW per month- energy rate

646552647738647755RUR/МW per month- power rate

Double-rate tariff***:2

340027102550RUR/MWh4000 - 5000 hrs

266024102130RUR/MWh5000 - 6000 hrs

256022502010RUR/MWh6000 - 7000 hrs

Single-rate tariff (with annual hours of the declared power consumption)**:1

MV 2(10kV)*MV 1(35kV)*HV (110 kV)*

Voltage RangesUnit of Measurement

Consumers Groups

*The data on electricity cost depends on the voltage**The fee will depend on the number of hours to be consumed during a year. We assume that the industrial enterprise as the Continental company plans will consume 4 – 5/ 5-6/ 6-7 thos. hours per year. This will depend on the technological process and should be defined by the engineers of Conti. ***It’s also possible to pay for the power consummated and additionally for the energy. The optimal variant should be calculated basing upon the production process.

Government of the Nizhny Novgorod Region

Ministry of Investment Policy

Tel.: +7 (831) 411-82-16inter@invest.kreml.nnov.ru

www.government-nnov.ru www.mininvest.ru