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OJSC PAVA (before July 2005 the company was known as OJSC "Agro-Industrial Company "Khleb Altaya") is one of the three largest grain processors on the Russian market. The Company's share in overall flour production in Russia is 3%.
The company operates three milling plants - each one is equipped with a modern concrete terminal (elevator) for storage and shipment of grain. PAVA mills have own access to railroad, so the products are conveniently shipped by railway. Two of the plants are located in the Altay Territory – in Mikhailovskoe and Rebrikha districts. The third plant is located in the Krasnoyarsk Territory (Achinsk city). After the production upgrade in 2005-2006, grain processing capacities stand at:
Rebrikha mill – 600 MT per day;
Mikhailovsky mill – 300 MT per day;
Achinsk mill – 520 MT per day.
The company's overall production capacity exceeds 360,000 MT of wheat flour per year. Also, the company produces about 80,000 MT of bran and 15,000 MT of feed mixes.
Being a long-time participant of the grain market, PAVA has developed a considered policy for acquiring maximum grain stock during harvest periods when prices are lowest. The policy is based on monitoring yields, carryover stocks of grain, processing volumes, export and import turnover as well as the regional, national and global level of grain prices.
Development dynamics
In the year 2005 OJSC PAVA made some outstanding achievements, most notably - the company became public. Subsequent to the results of 2005, in March 2006 PAVA was assigned the national corporate governance rating of B+ by the Russian Institute of Directors.
Due to the fact that flour market is highly competitive and stagnating, Management of the company implemented a number of key strategic decisions:
• Accelerating flour output and sales of consumer-size products. Products in smaller package (up to 10 kg) are designed for end-users as opposed to the companies incorporating PAVA products in the manufacturing process. B2C products appear more attractive compared to the B2B category. In order to promote sales of consumer-size products, in 2005 the company introduced "PAVA" trademark in addition to the existing “Altay-Batyushka” range. This increased the share of packaged products in the total sales from 13% to 17%.
• Boosting the export business. Global markets are facing shortage of grain processing products, while the domestic situation is characterized by oversupplies. Landscape of the international market allows to ship significant volumes abroad and enhancing business profitability.
• Implementation of advanced wheat processing project. Deep grain processing technology opens up the prospect of entering growing markets, as the new plant will specialize in production of starches, syrups, VWG, and other high-margin ingredients. The project has a advantage of replacing expensive imports.
• Expansion of farming activities. The company develops grain-growing production to provide feedstock security for own processing business, improve quality management and reduce risks of price volatility.
The last few years have shown that PAVA pursues a fundamentally new strategy, looking to accomplish transition to a vertically integrated agro-industrial holding structure and deliver superior value creation for shareholders as well as stakeholders./04,2011
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