America was the biggest market for the Russian-made Kalashnikov rifles. The ratio of sales was 80;20 to civilian and government. After the Ukraine crisis, the USA imposed sanctions and overnight the American market dried up. The company began to make losses. The owners invested $182 million in upgrading their standard AK-47 rifles. This bore fruit as the sales of guns to the Middle East has doubled. This was on the back of new products like guided artillery projectiles and precision weapons including sniper rifles. The company has been equipping the Russian army for 70 years and thus has a name in the international market.
Buoyed by the sale of its products the company is planning to invest another $180 million over the next two years for better products.
JV with India
The company is also in the process of signing a JV with India for the manufacture of the rifle in 2017. Krivoruchko the new stakeholder in the company is upbeat about the future and in particular manufacturing the rifle in India. He said he likes" make in India" tag of Narendra Modi as India is one of the largest markets in the world. Equipping its massive army of 1.2 million will by itself be a lucrative project. The joint venture should be taking off in 2017. The Indian army needs a modern rifle as the Indian made rifle has limitations. The Indian army has already inducted many Russian weapon systems like tanks in its arsenal.
sales
Despite the sanctions, the sale of rifles and other products have doubled in 2016. This is because the various warring factions first choice is the AK-47. Earlier the US was the largest market and the company is hoping that with Trump in power, it's a matter of time before the sanctions are lifted. If that happens the profits and sale of the weapons of the company will go up 4 times.
Last word
In the Middle East with an ongoing war, the products of the company including drones and vehicles are finding a ready market. The weapon is also cheaper than its western counterparts and is thus the first choice of both the terrorists and government troops.
