НАНОПРОМ Промышленные инновации NANOPROM SHORT COMPANY AND TECHNOLOGY PRESENTATION Moscow, 2010

НАНОПРОМ Промышленные инновации THE FORSAN® TECHNOLOGY PRINCIPLESTHE COMPANYS IMPLEMENTATION EXPERIENCE AND COMPETENCEABOUT NANOPROM THE TECHNOLOGY APPLICATION AREASECONOMIC EFFECT CALCULATION SAMPLES

НАНОПРОМ Промышленные инновации NANOPROMS MISSION AND MARKET NANOPROM is a solution provider in the resource & power saving market based on FORSAN® Industrial nanoceramic technology. We ensure: machines & technical infrastructure maintenance costs reduction accident rate and downtime reduction ecology metrics improvement RESOURCE AND POWER SAVING BUSINESS RELIABILITY AND CONTINUITY ECOLOGY

НАНОПРОМ Промышленные инновации ABOUT NANOPROM Over 10 years of successful implementation of resource & energy saving solutions in industry and transportation Unique proprietary FORSAN® Industrial technology of creating nanoceramic layer for equipment protection and recovery The technology certified and approved by The All-Russian Scientific Research Institute Of Railway Transport, Gubkin Russian State University of Oil and Gas, the Admiral Makarov State Maritime Academy, and by other research centers, institutes, laboratories and enterprises Manufacturer recommendations Dozens of successful tests and implementation Rosneft, Lukoil, Siberian Coal Energy Company, Navoi Ore-Dressing and Processing Enterprise, Moscow River Steamship Company, Admiralty Docks, Baltic Fleet, Russian Water Canal, MosTransAvto, MosGorTrans, Tutaev Engine Plant and many others

НАНОПРОМ Промышленные инновации NANOPROM MAIN AREAS OF BUSINESS Industrial: Implementation of integrated projects for industrial customers in various areas including resource/power audit, equipment processing, and further technical maintenance Infrastructural: Partnering with manufacturers of parts, mechanisms and machines in order to market new products with improved consumer characteristics Consumer: Production and marketing of consumer products for cars distributed through retail channels as well as professional service centers and automotive dealer centers

НАНОПРОМ Промышленные инновации THE CORE OF FORSAN® INDUSTRIAL SOLUTION FORSAN® Nanoceramics technology allows for creating an extremely thin nanoceramic protective layer on the surface of the metallic friction pairs without dismantling, which has four unique features: The technology is applicable in any climate and weather Recovery (defect elimination) of worn surfaces Friction reduction dramatic power inputs reduction (efficiency improvement) Improvement of the lubricants usage effectiveness Wear-and-tear reduction the parts resort is increased due to surface strengthening

НАНОПРОМ Промышленные инновации FORSAN® INDUSTRIAL PRINCIPLE OF OPERATION The microscope allows to see that the friction part surfaces are not ideally flat Metal part surfaces Grease (oil) FORSAN® particles are introduced into the friction pair using a lubricant (motor oil or consistent grease) A complicated process of the metalloceramic layer formation on the surface of the parts The resulting surface is characterized with low roughness and high hardness levels

НАНОПРОМ Промышленные инновации FORSAN® LAYER PICTURE MADE USING A MICROSCOPE Basic metal Surface defect recovered through the FORSAN® technology deployment

НАНОПРОМ Промышленные инновации FORSAN® LAYER PICTURE MADE USING A MICROSCOPE Metal surface before processing with FORSAN® Metal surface after processing with FORSAN®

НАНОПРОМ Промышленные инновации THE TECHNOLOGY WAS TESTED AT RESEARCH CENTERS The All-Russian Scientific Research Institute Of Railway Transport (ARSRIRT) Gubkin Russian State University of Oil and Gas The St. Petersburg Institute of Mechanical Engineering V.P. Goryachkin Moscow State Agro-Engineering University St. Petersburg State Polytechnic University The Institute for Problems in Mechanics, Russian Academy of Sciences The Admiral Makarov State Maritime Academy The Central Naval Scientific Research and Design Institute

НАНОПРОМ Промышленные инновации SAMPLE RESEARCH RESULTS (ARSRIRT*) The research of FORSAN® influencing the friction in the diesel engine blocks: …The roughness level of the surfaces … tested using … FORSAN® is significantly lower as compared to tests without … FORSAN®. Micro-roughness of the ОА20-1 alloy is 12% higher. The babbit wear decreases by 22%. The Institute recommends FORSAN® for trial operation for internal-combustion engines, compressors and other blocks having plain bearing, both new and those that have not yet reached limiting wear. The research of the FORSAN® flange lubricant influence on the tribotechnical characteristics of the rail-wheel pair: …The solid lubricating Forsan coating affects effectively the wear-and-tear of the pair rollers: tire steel – rail steel. The level of the tire steel wear lowers by 5 times, and the rail steel wear decreases by 4 times. The Institute recommends Forsan for trial operation for wheel flange lubricating. * - AllRussian Scientific & Research Institute for Railways Technologies ("VNIIZT)

НАНОПРОМ Промышленные инновации MANUFACTURERS RECOMMEND FORSAN® Tutaev Engine Plant – manufacturer of heavy diesel internal-combustion engines for civil and military platforms including KAMATSU and BelAZ Borisov AvtoGygroUsilitel Plant – manufacturer of steering booster pumps for domestic cars, buses and trolleybuses

НАНОПРОМ Промышленные инновации THREE FORSAN® Nanoceramics BASIC PRODUCT LINES FORSAN® Nanoceramics Protection & Restore FORSAN® Nanoceramics Professional FORSAN® Nanoceramics Industrial Retail products for new and second-hand vehicles Products for professional processing of motor vehicles in a maintenance center environment Products for use by engineers within the industry and for industrial transport based on various block and unit types

НАНОПРОМ Промышленные инновации MAIN TECHNOLOGY PATENTS 1. The patent for invention Method of creation of antifriction layer of contacted friction surfaces, , priority date March 4, The patent for invention Method of processing the metal parts surface , priority date February 18, The patent for invention Method of ultrasound metal surface processing , priority date February 18, The patent for invention Composition for metal modification and metal surfaces recovery , priority date August 31, 2000

НАНОПРОМ Промышленные инновации MAJOR TECHNICAL AND ECONOMIC EFFECTS OF FORSAN® Forsan® Industrial implementation allows for: Electricity consumption reduction (up to 5-10% and more) Cutting oil and lubricants consumption (up to 5-15%) Units useful life increase (up to %) Repair and maintenance expenses reduction (up to 20-70%) Worn-out parts and mechanisms recover (in some cases to normal) Environmental metrics improvement Increase sale-off price of used equipment in case of its sale in the market (up to 2-10%)

НАНОПРОМ Промышленные инновации TWO KEY BASIC EFFECTS FRICTION REDUCTION SURFACE RECOVERY The eventual economic bottom-line is related to different influences caused by these two key effects in various usage patterns and mechanisms. Peak positive results (which percentage is expressed in two-digit figures) are reached in case of the combined effect of the two factors.

НАНОПРОМ Промышленные инновации THREE DIMENSIONS OF FORSAN® ECONOMICAL EFFECTS TYPES OF ECONOMICAL AND ORGANIZATIONAL EFFECTS TECHNICAL SYSTEMS TYPES Internal-combustion engines Compressors Transmissions Reduction gears etc Motor vehicles Locomotives Cranes and reach truckers Pumps and compressor units Ore & mining equipment etc Reduction of fuel/energy consumption Repair and maintenance costs decrease Reduction of accident rates and downtime Service quality improvement Environment etc 9 CLASSES OF EQUIPMENT

НАНОПРОМ Промышленные инновации VALUE OFFERED Direct economic effects are only a base for creating significant additional value! Repair and maintenance cost reduction Machinery life-time increase Reduction in power and fuels and lubricants costs Profitability and performance increase Accident rate and downtime decrease Reduction of the infrastructure total cost of ownership Environment Business processes continuity, security and reliability Competitiveness increase Creation of new value-added products

НАНОПРОМ Промышленные инновации FORSAN® IMPLEMENTATION EFFECTS DIRECT EFFECT Example: Fuel or power cost reduction TOTAL EFFECTS Examples: Ensuring a reliable production program fulfillment based on the reduction of repairs, failures and off-schedule downtime Decreasing the risks of payments related to non-performance Reduction of losses caused by profit deficiency Competitiveness growth INDIRECT EFFECTS Examples: Repair and maintenance cost reduction Cutting expenses for equipment purchase due to a higher productivity factor of the equipment T >> I >> D I D T

НАНОПРОМ Промышленные инновации NANOPROM PROJECTS ORGANISATION AUDIT & DIAGNOSTICS PAYBACK CALCULATION EQUIPMENT PROCESSING MAINTENANCE & SUPPORT Equipment map Objects classification Decision about the applicability of FORSAN® Savings Technical and economic assessment (feasibility study) Project schedule Technical systems and blocks processing Additional diagnostics if required Measurements and reports FORSAN® products shipments and maintenance when required Scheduled equipment processing Check measurements Delivery of FORSAN® products when required

НАНОПРОМ Промышленные инновации APPLICABILITY FOR TECHNICAL BLOCKS Internal-Combustion Engines Reduction GearsBearings Pumps & CompressorsTransmissionsTurbines Railway wheel flanges Wheels and axes

НАНОПРОМ Промышленные инновации MAIN INDUSTRIAL APPLICATIONS Industry, Power engineering, Oil & Gas : Machinery/Equipment useful life extension Machine maintenance costs reduction Emergency shutdown risk reduction Railway transportation: Prolongation of locomotive engines useful life Fuel costs reduction Rails/wheels wear & tear prevention Vehicle fleet & Auto transportation: Vehicle operation life extension Fuel maintenance costs reduction Long-term protection of internal-combustion engines and vehicle blocks Utilities: Pumps operation life increase Reduction of energy consumption Reduction of water delivery emergencies Fleet: Reduction of fuel & maintenance costs Freight cost price reduction Emergency risk reduction Agriculture: Agricultural machinery operation life extension Accident rate and downtime decrease Cost price reduction Fleet Railways Motor transport Agriculture Utilities Power Engineering Heavy Industry Metallurgy Ore & Mining Paper Industry Chemical Industry Food industry

НАНОПРОМ Промышленные инновации EXAMPLES OF INDUSTRIAL SOLUTIONS: OIL PRODUCTION intended for processing reduction gears of pumping units provides for power consumption reduction (by over 6%) extends reduction gears service life is developed specifically for reduction gears of pumping units ensures the retaining of the effect for one year easy to use is applied annually is used for Rosneft and Lukoil projects The period of direct payback is from 4 to 7 months FORSAN® Nanoceramics PURE

НАНОПРОМ Промышленные инновации EXAMPLES OF INDUSTRIAL SOLUTIONS: RAILWAYS Locomotive internal-combustion engines Box blocks Reduction gears of wheel-and-engine blocks Rail/Wheel flange pairs FORSAN® APPLICATIONS FORSAN® ECONOMIC EFFECTS Reduction in diesel fuel consumption in the locomotion internal-combustion engines by 5-10% and more Reduction in motor oil burn-off waste in the locomotion internal-combustion engines by 15% Decrease in scheduled repairs and the number of off-schedule repairs* Increase in reliability of the rolling stock units and blocks Wheel and rail flange wear-and-tear decrease For example, the number of scheduled repairs of the internal-combustion engine liners decreased by 3.5 times, and that of the base bearings and the connecting-rod bearings in the internal-combustion engine was reduced by 2.5 times

НАНОПРОМ Промышленные инновации EXAMPLES OF INDUSTRIAL SOLUTIONS: RAILWAYS FORSAN® FLANGE LUBRICATORS A solid-state flange lubricating rod based on the FORSAN® technology for wheel flange lubrication FORSAN flange lubricator has the best protective and environmental characteristics compared to traditional greasing substances Test Results by the All-Russian Scientific Research Institute Of Railway Transport: -the level of the tire steel wear-and-tear lowers by 5 times, and the rail steel wear decreases by 4 times. -the rate of the FORSAN® rod consumption is 4-5 mm per 6 hours of testing (over km run per a single rod) -FORSAN® trial operation for wheel flange lubricating is recommended.

НАНОПРОМ Промышленные инновации EXAMPLES OF INDUSTRIAL SOLUTIONS: MOTOR TRANSPORT FORSAN Pro is a product intended for professional use at maintenance centers FORSAN Pro ensures the extension of the vehicle parts useful life and allows for a long- term retaining of rated performance characteristics. FORSAN Pro USAGE EFFECT: Long-term prevention of a vehicle engine and transmission wear-and-tear (for a year or longer) Fuel consumption reduction (from 5 – 15%) Steering booster service life extension (from 2 to 3 times) Recovery of the vehicle worn metallic parts Improvement of the exhaust system environmental characteristics (СО-СН) Easy start in any climatic conditions

НАНОПРОМ Промышленные инновации SAMPLE PRACTICAL ECONOMIC EFFECT ASSESSMENT A coal-mining enterprise A Russian vertically integrated oil production company A transportation company (railway) within a large metallurgical plant Direct fuel cost savings, RUR115 million Repair and downtime reduction, RUR210 million 65% 35% 19% 45% Direct fuel and power cost savings, RUR0.27 billion Downtime decrease, RUR0.5 billion Repair cost reduction, RUR0.63 billion 15% 85% Direct fuel cost savings, RUR21 million Downtime decrease, RUR112 million

НАНОПРОМ Промышленные инновации SAMPLE FORSAN® ECONOMIC EFFECT ASSESSMENT Example 1: An industrial holding with regional presence: embraces 7 enterprises throughout Russia uses multiple pumping equipment incurs high energy costs is unable to raise prices in order to increase profits participates in state tenders for industrial assets management which also include the technologies in use Principal equipment: pumping units, air blowers, superchargers Power consumption decrease (3…7%) Bearings service life Increase ( %) Fuels and lubricants consumption decrease (10-20%) Repair downtime reduction

НАНОПРОМ Промышленные инновации FORSAN® EFFECTIVENESS The assessment of the total economic effect in Kaluga branch: direct savings:$ per year expenditures:$102,000 per year TOTAL economic effect:$ per year Kaluga branch Barnaul branch Krasnodar branch Omsk branch Orenburg branch Tver branch Tyumen branch Assessment of the economic effect across the holding: direct savings:$ per year expenditures: $ per year TOTAL economic effect: $ per year EXAMPLE: AN INDUSTRIAL HOLDING

НАНОПРОМ Промышленные инновации FORSAN® EFFECT ASSESSMENT IN KALUGA BRANCH Type К, 144 units Type D, 67 units Type SМ, 56 units Other types, 175 units Type NS/SD, 162 units roubles roubles roubles roubles roubles Total annual: roubles

НАНОПРОМ Промышленные инновации Type of equipment (pumping unit):Type D 6300/27D 630/95NS 160/45SM Capacity, kilowatt Power consumption decrease (%)3333 Power saving (kilowatt)1856,91,11,35 Annual power saving (kilowatt) Number of motor hours per year (kilowatt-hour)8760 Cost of 1 kilowatt-hour (roubles)2,13 Saving per one unit per year (roubles) Number of units Savings per the water supply channel (roubles) FORSAN® EFFECT CALCULATION FOR SINGLE BLOCKS Conservative estimation of economical effect: Power consumption reduction rate 3% (ниже минимального значения) Ignore other economy factors (such as repairs, downtime, spare parts and tools, labour expenditures, etc)

НАНОПРОМ Промышленные инновации SAMPLE FORSAN® ECONOMIC EFFECT ASSESSMENT Example 2: A transportation company: maintains public passenger transportation in the metropolitan area operates buses of different brands incurs high diesel fuel and fleet repair expenditures suffers losses resulting from bus breakage downtime has to comply with ever-toughening environmental standards Principal equipment: internal-combustion engines, transmissions (gearboxes), reduction gears Fuel and lubricants consumption decrease (5..8%) Increase of useful life before overhaul (by %) Exhaust opacity reduction (by 2-3 times) Repair and maintenance downtime reduction

НАНОПРОМ Промышленные инновации Main vehicle types Mercedes Sprinter 100 units Setra S units Total annual economy for the vehicles in question roubles roubles roubles roubles GAZel units LiAZ units roubles FORSAN® EFFECTIVENESS IN A TRANSPORTATION COMPANY

НАНОПРОМ Промышленные инновации FORSAN® EFFECT CALCULATION FOR INTERNAL COMBUSTION ENGINES Minimum guaranteed economy - 5% (only internal-combustion engines are processed) Comprehensive vehicle processing (mechanical gearbox, axle reduction gears) ensures fuel savings up to 10% Other savings are not included (repairs, downtime, spare parts and tools, labour expenditures, etc.) Type of vehicle GAZelMercedes SprinterLiAZ-5256Setra S319 Average fuel consumption, L/100 km14,512,528,535,5 Average mileage per year, km Average fuel consumption per year, L Guaranteed fuel consumption economy (5%) per year, kg Average oil burn-off waste per year (1% of the fuel consumption), kg 156, ,2255,6 Guaranteed oil burn-off waste economy (15% of the oil consumption) per year, kg 23,520,330,838,3 Fuel/Oil cost, roubles per year22/5020/8020/5020/80 Guaranteed fuel economy (5%) per year, roubles Guaranteed fuel and lubricants economy per year, roubles Enterprises economy due to comprehensive processing (average of 10%), roubles

НАНОПРОМ Промышленные инновации RAILROAD IMPLEMENTATION EXAMPLES

НАНОПРОМ Промышленные инновации EXAMPLES OF IMPLEMENTATION IN OIL PRODUCTION SECTOR UdmurtNeft, OJSC Equipment Pumps NB-125 – 5 units Conventional pumping units – 5 units Main deployment result Conventional pumping units: Average power saving of 6.2% Pumps: Average power saving of 10.8% UdmurtNeft, OJSC recommends using FORSAN® Industrial technology for Conventional pumping units and NB-125 pumps for power consumption economy.

НАНОПРОМ Промышленные инновации EXAMPLES OF IMPLEMENTATION IN OIL PRODUCTION SECTOR LUKOIL – Volgogradneftegaz, LLC Equipment TsЗNK reduction gears – 450 – 6 units Ts2NSh reduction gears – 315 – 10 units Main deployment result Average power savings for the conventional pumping units group (complete processing): 8.2% Average power savings for the conventional pumping units group (reduction gear processing only ): 5.9%

НАНОПРОМ Промышленные инновации FLEET IMPLEMENTATION EXAMPLES Moscow River Steamship Company, OJSC Rechnoi-87 tugboat primary motor Main implementation results: Average compression pressure increase by 5% Average fuel consumption reduction by 5.9% Baltic Fleet, LLC D-120-N-8V diesel engine (in a pre-fault condition) Main implementation results: Cylinder compression became equalized and grew by 16.3% on average All technical characteristics were restored to normal FORSAN® nanoceramics is recommended for Baltic Fleet, LLC boat engines processing

НАНОПРОМ Промышленные инновации MECHANICAL ENGINEERING IMPLEMENTATION EXAMPLES According to the tests results, Tutaev Engine Plant, OJSC officially recommends FORSAN® for friction pairs recovery and reconstruction including for the plants products. Tutaev Engine Plant, OJSC SAN 4500 KOMATSU press base bearings Main implementation results: the operability of the previously broken press recovered the base bearing heating decreased by 4.5 times power consumption reduced by 50%

НАНОПРОМ Промышленные инновации NANOPROM, OJSC , Moscow, building 1, 8a, Ryazansky avenue tel/fax: (495) , THANK YOU FOR YOUR COOPERATION!