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Internet-Conference KAMAZ Inc.: Preliminary Results of the Year

1. Question to all the participants. Does it make sense to buy KAMAZ Inc.'s shares? If yes, then why? FUTURES2000

   This question should be re-addressed to the share market analysts. In line with corporate ethics we would prefer not to answer this question. Since the beginning of 2004 capitalization has increased from USD 295million up to USD 380 million. Urmanov Akhat (KAMAZ Inc.)

   
   

2. Can it be expected that shares of NefAZ and other KAMAZ Inc.'s subsidiaries will be exchanged for shares of KAMAZ Inc.?

   The Corporation is not considering such plans yet. Urmanov Akhat (KAMAZ Inc.)

   
   

3. What steps KAMAZ Inc.'s management is currently undertaking or is going to undertake (or has it ever undertaken before) to increase cost capitalization of the Company. Investor.

   We undertake certain actions targeted at increasing liquidity of shares and ensuring open policy of the Company. In particular, the Board of Directors has adopted a dividend policy. In line with it, for eight years already the Company has been drawing out and publishing its reports that fully comply with the international standards, but what's more important there are signs indicating a stable tendency of the Company's development. Recently, there was performed listing of KAMAZ shares at the quotation list of the Russian market system. Urmanov Akhat (KAMAZ Inc.)

   
   

4. At the end of 2003 KAMAZ Inc. has floated the first funded loan. It was planned to allocate these funds for substitution of short-term bank credits. Were these aims achieved and what was the economic effect? Is KAMAZ Inc. planning to be at the stock market in the future? Private investor.

   All targets of the funded loan have been met. Economic effect is about 50 million Rubles. After the funded loan KAMAZ-Finance has floated its own bonds valued 450 million Rubles that are quoted within the Russian trade system (which is out of exchange net). The Company plans to proceed reorganizing its loan portfolio without increasing the total amount of its liabilities. Urmanov Akhat (KAMAZ Inc.)

   
   

5. What is your estimation of the leasing program feasibility, and what was the volume of goods that have been marketed through that scheme? It would be interesting to know the key terms of leasing contracts. Investor.

   Leasing program has appeared much more economically effective as compared with direct sales. In 2003 KAMAZ Inc. has leased 3% of trucks and 19% of buses from the total share of the marketed output. In 2004 it is planned to increase share of leased vehicles up to 7% for trucks and up to 25 % for buses. We are ready to be very flexible but our key terms remain the same, i.e. 20 % min. of advanced payment, a 3-year installment payment, a possible leased product cost increase by 7% min. annually. Telephone: +7(8552) 37 1143. Urmanov Akhat (KAMAZ Inc.)

   
   

6. How are prices established inside the Holding and who is the centre of profit? Investor.

   There are inter-corporate (transfer) prices inside the holding. The parent company is the centre of profit. Urmanov Akhat (KAMAZ Inc.)

   
   

7. When will be published a consolidated report of the Holding? Investor.

   In April 2004. Urmanov Akhat. (KAMAZ Inc.)

   
   

8. At the end of 2002 during the visit of KAMAZ Inc.'s delegation to Khanti-Mansyisky Region it was decided to establish a service centre in Surgut city. Is it established and is it operating successfully? NewsProm.Ru

   Such a service centre has been established. It started its activities by selling spare parts and rendering services. It is planned that by September 2004 it will meet its target capacity. Urmanov Akhat. (KAMAZ Inc.)

   
   

9. What share of the Russian market of buses and small range trucks is KAMAZ Inc. going to win in the nearest future? Investor

   In 2004 it is planned to begin marketing small range trucks as of a mass product. And it is planned to increase the market share of large buses from 13% to 20% in 2004.

   
   

10. What new investment projects has KAMAZ Inc. got? What are current and expected production volumes of the main product? How big is the investment budget? Investor.

    In the Company's portfolio there are 33 projects that have been prepared for making an investment budget. All these projects have a high ROI level and have successfully passed expertise. The projects include new trucks and components, engines to meet future environment protection standards, modernization of processes at the Foundries, introduction of lean and flexible technologies, reduction of fixed cost, and advancing of information systems. In 2004 it is planned to market 26 400 trucks (a 10% increase vs.2003), over 900 buses (a 1,5 times increase), 40 000 passenger cars (a 1% increase). Urmanov Akhat. (KAMAZ Inc.)

    
    

11. Upon results of 2002 KAMAZ Inc. Group has dead loss acc. to IAS, what is the preliminary result of 2003? Investor.

    We are expecting profit! Urmanov Akhat. (KAMAZ Inc.)

    
    

12. The head of RusPromAuto estimates the business of this company as equal to USD 1 billion. How do you estimate KAMAZ Inc.'s business? Investor.

    As far as we know analysts estimate that cost of one KAMAZ Inc' share is within a range of USD 0.43 - 0.70. Urmanov Akhat (KAMAZ Inc.)

    
    

13. What is the quantity of declared and floated KAMAZ Inc.'s shares and when there will be next additional issue ?

    There are declared 93 151 482 shares and floated 785 747 574 shares. No additional issue is planned. Urmanov Akhat (KAMAZ Inc.)

    
    

14. Will there be made a complete Report in accordance with the International Standards of Financial Accountability (ISFA)? I mean not only report on profits and losses and balances sheets, but also reports on cash flow and other forms and notes. Investor.

    It is planned to expand the number of forms on reports in acc. to ISFA. This practice will be first introduced in the 2003 annual report. Urmanov Akhat (KAMAZ Inc.).

    
    

15. What will be consequences of steel cost increasing? How will it impact the Company? Will it possibly result in change of the Company business plan? Analytic.

    Prices went up much higher than it was stipulated in our business-plan. Now we are going to correct the business plan. Urmanov Akhat (KAMAZ Inc.).

    
    

16. How significant will be the changes? Analytic.

    Calculations are being carried out. Urmanov Akhat (KAMAZ Inc.).

    
    

17. What are the plans for development of the Passenger Car Plant? Is it planned to change the model range? Investor.

    Adaptation of a new Euro-2 engine is currently in progress. We are negotiating with potential partners on development of a new passenger car model. Urmanov Akhat (KAMAZ Inc.).

    
    

18. How does the federal government impact financial results of KAMAZ Inc. (by placing its orders, increasing its fleet of army vehicles, supporting capacities, etc.) Investor.

    Orders that come from various structures of the federal government constitute 10-15% from the total volume of marketed output of the Company. Actually, there were no any benefits in 2004 that might support production capacities. The government to support the fleet of the army vehicles in 2003 has allocated about 60 million Rubles. Urmanov Akhat (KAMAZ Inc.).

    
    

19. What other major corporation can KAMAZ Inc. be compared with if to consider its markets and large-scale activities?

    KAMAZ Inc. is the largest manufacturer of great variety of heavy-duty and middle-range trucks in Western Europe and in CIS. Sales markets and large-scale activities rank KAMAZ among the world leading OEMs. The current fleet of KAMAZ Inc. is over 500 000 trucks. Actually, the Company ensures transport security of the country. Urmanov Akhat (KAMAZ Inc.).