Connector, Joint-Stock Company

Chairman of the Board, General Director - Yevhen V. Datsenko

Ladies and Gentlemen,

It gives me great pleasure to present you the "Connector" Company that celebrated its 40 anniverssary.

Our speciality is to develop and manufacture low frequency electrical connectors. Constant innovation over the years has given us a large range of products and it is no empty boast to say that among the CIS and many other countries we believe we can connect virtually any piece of electrical equipment to any other. Today our products are in use in many different applications in different countries of the world - from front line jet fighter to small motor cars, in telecommunications and in the computer industry. Our products help to harvest wheat and to powerful battle tanks.

Whether the application is military or civil we have both production and technical expertise to meet the strictest rquirements on the part of our customers. We are the leading supplier of electrical connectors to the CIS countries and, naturally, Russia is an important export market for us.

But we serve other markets besides the CIS and this area of our expansion is a growing priority for us to use our obvious commercial advantages - we are a low-cost producer, to enter other markets but in partnerships with other companies. This has become the age of global alliances and the Connector Company wishes to build a mutually profitable alliance with other companies. It is vital we should not be alone in the cold struggle for market share.

We are a company with an increasingly flexible approach to doing business and we want to develop a market presence in many other countries, ideally with market leading progressive partners. We are an ambitious company - now we are recruiting 20 of the brightest young graduates annually from the Kharkiv University of Radioelectronics to strengthen future management teams.

We have two manufacturing plants located in Kharkov that manufactures many products. One of these plants, at Bezlydi vka, manufacturers a range of plastic-based connectors that are used primarily in the aircraft industry. This plant will be the base for a joint venture with a compatible partner. Whilst these are our primary markets we are anxious to work with partners to add to our product range and so maintain our awareness of developing technology.
Those of you seeking to develop new business opportunities in the CIS will be aware that this is a different country with a different business culture and different methods of doing business. This is our comfort zone and we can make sure it becomes your comfort zone too.

Our initial joint venture project is one to develop and manufacture in Ukraine a range of ARINC connectors as well as connectors which meet DIN 41612 and DIN 41651 standards. These connectors will be needed in printed circuit board manufacture for the I & C systems for nuclear power plant turbines, in telecommunication equipment and other systems.

The USA and Western Europe are already doing business with Ukraine. Westinghouse and ABB are two major companies that are working with major Ukrainian companies such as Khartron, Monolit, etc. Equipment manufactured by these companies use imported electrical connectors from American companies such as ITT Canon, AMP and others. Manufacture of these connectors in Ukraine will open up many other opportunities in the PBX segment where production is taking place for example at MKMTELEKOM, Cheshara, Monis, DEO, and Alcatel.

Of course, once we have established the new production facility in Kharkiv, we can exploit the opportunities for sale of these connector systems in other CIS countries as well. We estimate Ukrainian annual demand for connectors as USD 2 million in terms of value. The project cost is likely to be USD 5.3 million of which the "Connector" Company will invest USD 3 million and USD1.5 million are required from the foreign partner. We will form a hard-currency fund of about USD 800,000 from a combination of short-term bank credit at 20% interest and USD 650,000 from reinvestment of the profit yields to the project.

Payback is estimated at 5 years.

We believe a separate joint venture physically segregated from existing production with an area of about 70,000 square feet will be required. The joint venture will have a building costing USD 500,000 and equipped with modern production equipment needing another USD 2.5 million. The estimated output will be around 2 million pieces per year.

No additional construction work will be required, nor the purchase of land. Some investment will be needed for environmental protection, namely, to modernize the waste disposal plant, which will cost about USD200,000. Work to commission a new canteen facility, together with the installation costs of new equipment are expected to cost about USD 450,000.

Potential investors are expected to be able to lead the process of technology transfer and to assist with the specifics of changing aspects of the management methods used to control joint venture activities. It will also be favourable for the joint venture partner to appoint the Chief Financial Officer to the project who may also provide strategic assistance to the project.

In addition to this specific exciting joint venture opportunity Connector believes that there are other mutual benefits to come from a new alliance. Connector was originally built as a huge plant with enormous production facilities. As a result of the break-up of the Soviet Union and the decline of the economies of the CIS countries we have now idle facilities in die-casting - unused capacity for 2,000 tonnes per year of castings up to three and a quarter pounds in weight. In addition, we have capacities for electroplating, machining and tooling.

So, with our low labour costs and skilled personnel, we may be able to reduce your costs and create superior margins for your company and a benefit to ours. We are willing to consider any form of joint co-operation. Please contact us when you have an opportunity that you think may be of interest to us both.

Kharkiv has a proud history of electronics and engineering backed up with many technical institutes and universities. There is a highly skilled workforce here wishing to work and to re-build our regions industrial prosperity.

If you come and join us here, we will not let you down.