MIRA INFORM REPORT

Report No. :	496237
Report Date :	12.03.2018

IDENTIFICATION DETAILS

Name :	PAO MAGNIT
Formerly Known As :	· OJSC MAGNIT · OAO MAGNIT
Registered Office :	Magnit Building, Solnechnaya Street 15/5, Prikubanskiy Okrug District, 350072 Krasnodar
Country :	Russia
Financials (as on) :	31.12.2016
Date of Incorporation :	12.11.2003
Com. Reg. No.:	1032304945947
Legal Form :	Public Joint Stock Company
Line of Business :	· Retail sale in non-specialised stores with food, beverages or tobacco predominating · Renting and operating of own or leased real estate · Retail sale of meat and meat products in specialised stores · Retail sale of bread, cakes, flour confectionery and sugar confectionery in specialised stores
No. of Employees :	280,000

RATING & COMMENTS

(Mira Inform has adopted New Rating mechanism w.e.f. 23^rd January 2017)

MIRA’s Rating :

A

Credit Rating	Explanation	Rating Comments
A	Acceptable Risk	Business dealings permissible with moderate risk of default

Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List

Country Name	Previous Rating (30.09.2017)	Current Rating (31.12.2017)
Russia	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low Risk	A2
Moderately Low Risk	B1
Moderate Risk	B2
Moderately High Risk	C1
High Risk	C2
Very High Risk	D

RUSSIA - ECONOMIC OVERVIEW

Russia has undergone significant changes since the collapse of the Soviet Union, moving from a centrally planned economy towards a more market-based system. Both economic growth and reform have stalled in recent years, however, and Russia remains a predominantly statist economy with a high concentration of wealth in officials' hands. Economic reforms in the 1990s privatized most industry, with notable exceptions in the energy, transportation, banking, and defense-related sectors. The protection of property rights is still weak, and the state continues to interfere in the free operation of the private sector.

Russia is one of the world's leading producers of oil and natural gas, and is also a top exporter of metals such as steel and primary aluminum. Russia is heavily dependent on the movement of world commodity prices as reliance on commodity exports makes it vulnerable to boom and bust cycles that follow the volatile swings in global prices. The economy, which had averaged 7% growth during the 1998-2008 period as oil prices rose rapidly, has seen diminishing growth rates since then due to the exhaustion of Russia’s commodity-based growth model.

A combination of falling oil prices, international sanctions, and structural limitations pushed Russia into a deep recession in 2015, with GDP falling by close by 2.8%. The downturn continued through 2016, with GDP contracting another 0.2%, but was reversed in 2017 as world demand picked up. Government support for import substitution has increased recently in an effort to diversify the economy away from extractive industries.

Source : CIA

SUMMARY
COMPANY NAME	PAO MAGNIT
ADDRESS	Building	Street			Area			PO Box
	Magnit Building	Solnechnaya Street 15/5			Prikubanskiy Okrug District			350072 Krasnodar
TEL/FAX	Verified Phones: (+7 861) 277 4554 / (+7 861) 277 4562 Fax: (+7 861) 210 9810
EMAIL/WEBSITE	Email: info@magnit.ru / invest@magnit-info.ru / Website: www.magnit-info.ru
ACTIVITY	NACE 4711 - Retail sale in non-specialised stores with food, beverages or tobacco predominating; NACE 6820 - Renting and operating of own or leased real estate; NACE 4722 - Retail sale of meat and meat products in specialised stores; NACE 4724 - Retail sale of bread, cakes, flour confectionery and sugar confectionery in specialised stores;
PRINCIPAL	Khachatur Eduardovich Pombukhchan					Workforce
	Chairman					280,000
LEGAL INFO	Date Of Est.		Reg. No.	Legal Form			Status
	12/11/2003		OGRN 1032304945947	Public Joint Stock Company			Active
CAPITAL	CURRENCY			AMOUNT
	RUBLE (RUB)			946,000

IDENTIFICATION
CO. NAME	PAO MAGNIT
ENQUIRED NAME	OJSC Magnit
TRADEMARK	MAGNIT
ALSO KNOWN NAME (S)	PJSC Magnit
FORMER NAME	OJSC Magnit / OAO Magnit
BUILDING	Magnit Building
STREET	Solnechnaya Street 15/5
AREA	Prikubanskiy Okrug District
POSTAL ADDRESS	350072 Krasnodar
CITY	Krasnodar
COUNTRY	Russia
TELEPHONE	(+7 861) 277 4554 / (+7 861) 277 4562 / (+7 861) 210 9810 ext. 15101 (Investor Relations Department)
FAX	(+7 861) 210 9810
VERIFIED EMAIL	info@magnit.ru / post@magnit.ru / invest@magnit-info.ru / chistyak@magnit.ru / panfilkina_aa@magnit.ru
WEBSITE	www.magnit-info.ru
BUSINESS HOURS	DAYS	OFFICE HOURS	BREAK TIME
	Mon-Fri	09:00-18:00	13:00-14:00
REGISTERED ADDRESS	Solnechnaya Street 15/5, Prikubanskiy Okrug District, 350072 Krasnodar, Russia

SENIOR PERSONNEL

MANAGEMENT	NAME	POSITION
	Khachatur Eduardovich Pombukhchan Nationality: Russian Tax Code: INN 231103371187	Chairman
	Board of Directors Aslan Yurievich Shkhachemukov Aleksey Aleksandrovich Pshenichniy Aleksandr Vitalievich Alesandrov Dmitriy Igorevich Chenikov Sergey Nikolaevich Galitskiy Vladimir Evgenievich Gordeichuk Management Khachatur Eduardovich Pombukhchan Denis Anatolievich Fedotov Andrey Nikolaevich Arutyunyan Marina Alekseevna Ivanova Ilya Karimovich Sattarov Timothy Post Dina Svischeva Sergey Roschektaev	Chairman of the Board Member of the Board Member of the Board Member of the Board Member of the Board Member of the Board Chairman Managing Director Director Director Director Head of Investor Relations Deputy IR Director Senior Internal Auditor
WORKFORCE	NO. OF EMPLOYEES	PERIOD
	280,000 (Group)	01.2018

FINANCIAL SUMMARY
REVENUE	30/06/2017	31/12/2016
	USD 9,571,671,000	USD 16,033,612,000
NET PROFIT / (LOSS)	30/09/2017	31/12/2016
	USD 357,818,000	USD 811,652,000
PROFIT BEFORE TAX	USD 449,451,000 as of 30/06/2017
INVENTORIES	USD 2,544,801,000 as of 30/06/2017

LEGAL STATUS
INCORPORATION	12/11/2003
REGISTRATION NO.	C.R. NUMBER	ISSUED BY
	OGRN 1032304945947	Federal Tax Service
OTHER REGISTRATION NO.	INN 2309085638 (Tax Code) / KPP 231101001 / OKPO 70771130 (Statistics Code) / OKTMO 03701000001
AUTHORISED CAPITAL	AMOUNT	CURRENCY
	946,000	RUBLE
PAID-UP CAPITAL	AMOUNT	CURRENCY
	946,000	RUBLE
LEGAL FORM	Public Joint Stock Company
BUSINESS HISTORY	The Company was incorporated in Russia on 12 November 2003 under the name OAO Magnit (aka PJSC Magnit) with the following shareholding structure: - OOO Elektromagnit – 54.99% - OOO Universal Technology – 25% - Pavel Solovyev – 7.92% - OOO Kuban Parfum Treiding – 4.52% - Vladimir Gordeichuk – 4% - Nikolay Panuli – 1% - Aleksandr Prisyazhnyuk – 0.6% - Aleksandr Kazakov – 0.5% - Dmitriy Chenikov – 0.5% - Valeriy Butenko – 0.45% - OOO Transaziya-Kuban – 0.42% - Dmitriy Khristoforidi – 0.1% In 2014, subject changed its legal form to Public Joint Stock Company “Magnit” (the “Company” or PJSC “Magnit”) in accordance with changes in legislation. In February 2018, subject changed its shareholding structure to the present.
STATUS	Active
SHAREHOLDERS	NAME	PERCENTAGE
	1. PAO Bank VTB * 2. Sergey Galitsky * (through Lavreno Ltd) 3. Vladimir Gordeichuk 4. Free float 5. Shares controlled by the Group’s Management * TEARFUL MAGNIT FOUNDER SELLS OUT TO BANKING GROUP VTB FOR $2.5 BILLION FEBRUARY 16, 2018 (Reuters) - Russia’s Sergey Galitskiy has stepped down as CEO at the Magnit (MGNT.MM) supermarket chain he founded and sold most of his stake to state lender VTB (VTBR.MM) for about 138 billion roubles ($2.5 billion), bringing Kremlin influence into the retail sector for the first time. Galitskiy, 50, who founded Magnit in 1994, told a news conference with VTB chief Andrey Kostin it had not been an easy decision to sell. “I founded this company, but time passes and nothing is for ever,” he said in a voice cracking with emotion. The sale follows a difficult year for Magnit, as its market value halved on concern over slowing growth that resulted in it being overtaken by rival X5 (PJPq.L) as Russia’s biggest retailer. VTB’s newly acquired 29.1 percent stake makes it Magnit’s leading shareholder, with Galitskiy retaining only 3 percent, the state-controlled bank said. Magnit said VTB paid 4,661 roubles per share, representing a discount of about 4 percent to Thursday’s closing price of 4,850 roubles. By 1434 GMT on Friday the shares were down 7.8 percent in Moscow at 4,472 roubles and had dropped 11 percent in London. Galitskiy have no specific reason for the sale but said: “The final push came from the fact that the company’s investors stopped seeing eye to eye with its shareholders over what the situation looks like going forward.” Magnit’s stores, which target lower-income consumers, have struggled to compete against aggressive discounting by X5 and last month the group reported a 42 percent drop in quarterly net profit and said it was unlikely to pay a dividend this year. At one point at the news conference Galitskiy was overcome with emotion and said he could not speak, prompting Kostin, a close ally of Russian President Vladimir Putin, to put a sympathetic hand on his shoulder. Galitskiy would be replaced as CEO by long-time Chief Financial Officer Khachatur Pombukhchan, effective Feb. 17, Magnit said.	29.1% 2.72% 2.54% 65.2% 0.44%

OPERATION
BANKERS	1. PAO SBERBANK Krasnoarmeyskaya Street 34 Krasnodar 350000 Russia Telephone: (+7 861) 275 0808 Fax : (+7 861) 219 0017 Acc. No. : 40702810330000100078 Corr. Acc. No.: 30101810100000000602 2. PAO VTB Bank Leninskaya Sloboda Street 26 Moscow Russia Telephone: +(7 800) 200 2326
AUDITORS	Ernst & Young 77 Sadovnicheskaya Embankment, bld. 1, Moscow, 115035 Russia Tel: +(7 495) 755 9700 E-mail: Moscow@ru.ey.com Ernst & Young is a member of the Audit Chamber of Russia Self-Regulated Non-Profit Partnership and is included in the reference copy of the register of auditors and audit organizations under identification number 10201017420.
ACTIVITY CODE (NACE)	NACE 4711 - Retail sale in non-specialised stores with food, beverages or tobacco predominating; NACE 6820 - Renting and operating of own or leased real estate; NACE 4722 - Retail sale of meat and meat products in specialised stores; NACE 4724 - Retail sale of bread, cakes, flour confectionery and sugar confectionery in specialised stores;
LINE OF BUSINESS	Holding and management company for its subsidiaries, which are engaged in diversified industry activities such as food retail industry, transportation services, operation of greenhouse complexes, IT operations, food processing and production as well as household production. Subject’s principle subsidiary is JSC Tander, which owns and operates convenience stores and hypermarkets. It distributes, retails, and supplies perfumery, cosmetics, and household chemical goods. As of December 31, 2017, Magnit operated 16,350 Retail Stores (12,125 Convenience, 243 Hypermarkets, 208 Magnit Family stores, and 3,774 Drogerie stores) in 2,709 cities, towns, and villages throughout 7 of the federal regions in the Russian Federation. The Magnit retail-store network is supported logistically by 37 Distribution Centers.
IMPORT FROM (GROUP)	worldwide, mainly from Turkey, Ecuador, Poland, Egypt, Israel, China, the Netherlands, Costa Rica, Serbia, Germany, France, UK, Switzerland, Austria, India, Morocco, Moldova, Ukraine and Belarus.
EXPORT TO	Subject does not engage in exporting activities.
FACILITIES	Premises comprising head offices located at the heading address as well as group’s 12,125 Convenience, 243 Hypermarkets, 208 Magnit Family stores, and 3,774 Drogerie stores) located in 2,709 cities, towns, and villages throughout 7 of the federal regions in the Russian Federation.
VEHICLES	Group has 6,089 Trucks for distribution purposes.
RELATED COMPANIES	Subsidiaries of PAO MAGNIT: 1. Retail Import LLC Russia Import operations 2. BestTorg LLC Russia Food retail in Moscow and the Moscow region 3. MFK LLC Russia 4. Selta LLC Russia Transportation services for the Group 5. TK Zelenaya Liniya LLC Russia Greenhouse complex 6. Tandem LLC Russia Rent operations 7. Alkotrading LLC Russia 8. ITM LLC Russia IT operations 9. Logistika Alternativa LLC Russia Import operations 10.Zvezda LLC Russia Assets holder, maintenance services for the Group 11.TD-Holding LLC Russia Production and processing of food for the Group 12.MagnitEnergo LLC Russia Buyer of electric power for the Group 13.Management Company Industrial Park Krasnodar LLC Russia Management of production assets 14.Kuban Confectioner LLC Russia Production of food for the Group 15.Kuban Factory of Bakery Products LLC Russia Production of food for the Group 16.Volshebnaya Svezhest LLC Russia Production of household chemicals for the Group 17.Moroznye Pripasy LLC Russia Production of food for the Group 18.JSC Tander Russia Food retail and wholesale

FINANCIAL INFORMATION
CURRENCY	USD
PERIOD	30/06/2017	31/12/2016
CURRENT ASSETS	2,789,131,000	2,619,480,000
STOCK/INVENTORIES	2,544,801,000	2,224,242,000
NON-CURRENT ASSETS	5,186,604,000	4,880,333,000
CURRENT LIABILITIES	3,544,123,000	2,731,970,000
NON-CURRENT LIABILITIES	869,807,000	1,535,285,000
EQUITY	3,561,805,000	3,232,558,000
BALANCE TOTAL	7,975,735,000	7,499,813,000
REVENUE	9,571,671,000	16,033,612,000
NET PROFIT / LOSS	811,652,000	968,885,000
NOTES	The following consolidated balance sheets as at 31/12/2016 applies to subject and its subsidiaries: 31/12/2016 31/12/2015 (in thousands of US DLRS) ASSETS Non-current assets Property, plant and equipment 4,780,088 3,649,644 Investment property 9,892 8,232 Land lease rights 43,514 39,540 Intangible assets 23,470 19,162 Goodwill 22,545 18,763 Long-term financial assets 824 1,852 4,880,333 3,737,193 Current assets Inventories 2,224,242 1,598,069 Trade and other receivables 13,916 13,634 Advances paid 85,864 72,661 Taxes receivable 7,383 1,326 Prepaid expenses 7,565 4,403 Short-term financial assets 3,559 3,386 Income tax receivable 3,952 - Cash and cash equivalents 272,999 115,129 2,619,480 1,808,608 TOTAL ASSETS 7,499,813 5,545,801 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Share capital 34 34 Share premium 1,511,666 1,510,336 Treasury shares - (5,307) Foreign currency translation reserve (2,413,987) (2,933,216) Retained earnings 4,134,845 3,693,994 Total equity 3,232,558 2,265,841 Non-current liabilities Long-term borrowings and loans 1,277,677 815,162 Long-term advances received 436 1,568 Deferred tax liability 257,172 176,781 1,535,285 993,511 Current liabilities Trade and other payables 1,383,573 1,212,527 Accrued expenses 175,549 132,738 Taxes payable 145,259 81,318 Dividends payable 196,793 233,167 Income tax payable - 9,203 Short-term advances Received 4,742 2,575 Short-term borrowings and loans 826,054 614,921 Total liabilities 4,267,255 3,279,960 TOTAL EQUITY AND LIABILITIES 7,499,813 5,545,801 CONSOLIDATED STATEMENT OF INCOME Revenue 16,033,612 15,594,588 Cost of sales (11,621,596) (11,151,836) Gross profit 4,412,016 4,442,752 Selling expenses (193,921) (207,612) General and administrative expenses (3,059,278) (2,883,839) Investment income 1,585 3,702 Finance costs (198,310) (194,986) Other income 60,208 64,967 Other expenses (13,260) (13,838) Foreign exchange gain/(loss) 16,992 (43,194) Profit before income tax 1,026,032 1,167,952 Income tax expense (214,380) (199,067) Profit for the year 811,652 968,885 The following Balance sheets as at 31 December 2016 applies to subject’s principal subsidiary, JSC Tander: 31/12/2016 31/12/2015 (in thousands of RUBLE) ASSETS Non-current assets Intangible assets 15,708 8,636 Fixed assets 203,057,806 186,694,167 Financial investments 2,842,289 2,764,260 Deferred tax assets 805 891 Other non-current assets 21,786,366 25,269,879 Total non-current assets 227,702,974 214,737,833 Current assets Stock 139,983,372 122,185,932 Value added tax on purchased valuables 431,761 348,164 Trade receivables 28,203,114 30,803,275 Financial investments 765,785 1,038,372 Cash equivalents 16,459,718 8,311,389 Other current assets 238,681 180,086 Total current assets 186,082,431 162,867,218 TOTAL ASSETS 413,785,405 377,605,051 EQUITY & LIABILITIES Share capital 100,000 100,000 Added capital 9 9 Reserve capital 15 15 Retained earnings 81,972,726 69,004,410 Total Equity 82,087,735 69,119,419 Long-term liabilities Borrowings 176,376,641 125,789,886 Deferred tax liabilities 5,476,628 4,967,596 Total long-term liabilities 181,853,269 130,757,482 Short-term liabilities Borrowings 20,994,938 45,345,616 Accounts payable 124,110,397 127,843,894 Total Short-term Liabilities 149,844,401 177,728,150 TOTAL EQUITY & LIABILITIES 413,785,405 377,605,051 INCOME STATEMENT Revenue 1,175,193,293 1,032,002,495 Cost of Sales 917,787,784 792,784,244 Gross Profit 257,405,509 239,218,251 Commercial expenses 264,155,806 230,744,885 Profit(loss) from sales -6,750,297 8,473,366 Other income and expenses Interest income 140,157 289,163 Interest payable 20,813,508 18,274,938 Income from participation in other organizations 293,804 12,373 Other income 113,061,246 103,757,139 Other expenses 38,547,242 39,440,848 Profit(loss) before taxation 47,384,160 54,816,255 Change in deferred tax assets 85 293 Change in deferred tax liabilities 509,033 -622,479 Current income tax 9,906,726 10,519,611 Net Profit(loss) 36,968,316 43,674,458

SPECIAL REMARKS
INTERVIEWED	Subject's employees.
COMMENTS	You enquired on: OJSC Magnit. Please note that this name applies to subject’s former name. Subject’s current registered name is as per heading.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	INR 65.08
UK Pound	1	INR 89.85
Euro	1	INR 80.16
RUB	1	INR 1.14

Note : Above are approximate rates obtained from sources believed to be correct

INFORMATION DETAILS

Analysis Done by :	PRI
Report Prepared by :	KET

RATING EXPLANATIONS

Credit Rating	Explanation	Rating Comments
A++	Minimum Risk	Business dealings permissible with minimum risk of default
A+	Low Risk	Business dealings permissible with low risk of default
A	Acceptable Risk	Business dealings permissible with moderate risk of default
B	Medium Risk	Business dealings permissible on a regular monitoring basis
C	Medium High Risk	Business dealings permissible preferably on secured basis
D	High Risk	Business dealing not recommended or on secured terms only
NB	New Business	No recommendation can be done due to business in infancy stage
NT	No Trace	No recommendation can be done as the business is not traceable

NB is stated where there is insufficient information to facilitate rating. However, it is not to be considered as unfavourable.

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors are as follows:

· Financial condition covering various ratios

· Company background and operations size

· Promoters / Management background

· Payment record

· Litigation against the subject

· Industry scenario / competitor analysis

· Supplier / Customer / Banker review (wherever available)

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