Izhmash Arms, founded in 1807 by Russia's royals, has come into financial trouble because pirated versions of its AK-47 Kalashnikov rifles are produced all over the world, Russian media report.

The legendary firearm, designed by Mikhail Kalashnikov in 1947, is a Russian success story. Because of its durability, low production cost and ease of use, the weapon and its numerous variants and derivatives (for example the 1970s AK-74 and the 1990s AK-101) remain the most widely used assault rifles in the world.

But the success of the rifles is also their doom. Today they are widely copied -- Izhmash's parent company, the Rosoboronexport State Corp., says dozens of businesses all over the world produce legal and illegal copies of the Kalashnikov. The World Bank estimated that out of the 500 million total firearms available worldwide in 2007, 100 million were of the Kalashnikov family, and 75 million were AK-47s. The weapon has been used by insurgents and soldiers in a number of conflicts involving NATO troops, including in Iraq and Afghanistan.

This problem is partly home-made. Izhmash during Soviet times granted production licenses to companies in Warsaw Pact member states or in countries where the Kremlin wanted to support rebel movements. After the fall of the Soviet Union, the companies simply continued to produce those weapons -- Rosoboronexport says illegally.

The news comes as Russian arms exports are dropping, with the economic crisis hurting Russia's overall weapons industry.

"The companies have not had big orders for a long time," the newspaper Gazeta quoted an industry expert as saying. "Izhmash Arms is no exception."

Last month an arbitration court in the Urals republic of Udmurtia accepted a bankruptcy suit against Izhmash filed by an alleged creditor, a small company named Gremikha, over a debt of more than $13 million. But the country has denied it is in financial trouble, adding that its order books are full, German news magazine Der Spiegel reports.

Besides the Kalashnikov series of assault rifles, Izhmash makes larger machine guns, small and medium-sized cannons, missiles and guided shells. It is also producing sports guns, such as biathlon rifles.

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