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Dynamic Russian wheat grain processing company - Pava

OJSC PAVA is one of the biggest and the most dynamically developing wheat grain processing companies in Russia. PAVA is specialized in producing flour and feed mixes, as well as in purchasing, storage and selling of grains. The most important factor, due to which the company has gained trust and popularity around the whole Russia and in many partner countries, is quality. PAVA flour is produced from ecologically pure grain cultivated in Altay region, which is a traditional supplier of high-gluten grains. Baking properties of Altay flour are highly appreciated by consumers. Moreover, favorable geographic position helps keep competitive prices as well as reasonable price-quality relation. PAVA is one of the industry leaders. The scale of Company’s activity, cost control and effective production optimization guarantee success and stability for PAVA even in times of crisis.

Written by Kateryna Ferdyn


Young Company - Impressive Achievements
PAVA Company was founded in 1999 under the name Khleb Altaya. The current name PAVA was accepted as a result of rebranding process in 2005. The first milling plant in Rebrikha of Altay region started its work in 2001 and since that time processing capacities were increased up to 400,000 tons of wheat grain per year. Currently PAVA products are manufactured by 3 company’s affiliates - in Rebrikha, Mikhailovsk (the Altay Territory) and Achinsk (the Krasnoyarsk region).
In 2005 PAVA was given the status of a public company, placing 10% of its share capital on Moscow Interbank Currency Exchange and making the first shipment abroad. 2007 was characterized by active growth of export sales, which resulted in taking leading positions in the segment of wheat flour export supplies in Russia. In 2008 two daughter companies were established – Russian Agricultural Division and Grainvest to develop company’s own agricultural base and organize production of highly profitable ingredients made of wheat grains. In September 2009 PAVA celebrated its 10th anniversary. For this quite a short period of time the company managed to become stable and successful. The company is now on the stage of changing its structure into vertically integrated one, which will help control the entire value chain from growing to trading of grains. Investment into agricultural production is going to provide PAVA with high-quality raw materials and reduce dependence on price volatility. Being the biggest wheat grain processing company in Siberia and Far East PAVA is proud of its leading role in the industry and innovative contribution to development of Russian economy. PAVA projects are considered by the government as those of high priority. Among Russian agricultural and food companies PAVA was the first to make a public offering, and together with giants of other industries successfully free-floated part of its capital, although being quite a young market participant. Last year the company has succeeded in overcoming the impact of crisis and became the only one in the industry to fully meet investor obligations after two dates of bond repurchase on RUR1 bln. loan. Sophisticated and harmonious financial policy allows to demonstrate successful results. In 2008 the net consolidated proceeds amounted to 160,893 thousand of dollars. The gross profit was 36,817 thousand of dollars, which meant 14,5% rise comparing to previous year. Growth of export sales, launching of new products contributed to dynamic development of the company. PAVA also carries dynamic investment activity, increasing net assets by 4 times, while decreasing debt burden - EBITDA ratio fell from 8,6 in 2007 to 5,9. OJSC PAVA employs around 2,000 of very qualified specialists. The key figures in the company are professionals with solid industry experience and higher education obtained in the leading foreign universities. Their professionalism helps carry out international business on a high level and implement the most ambitious plans.

Scale of Activity
PAVA aims to control the whole production cycle starting from cultivating of agricultural crops to sales in Russia and abroad, therefore the company is currently re-shaping its business into a vertically integrated agro-industrial holding. Daughter company of PAVA OJSC Russian Agricultural Division cultivates agricultural products. This company also has storage capacities of over 230,000 tons and includes trading company OJSC Transagro Corporation. 3 milling plants of PAVA produce flour of different grades, cereals, bran and feed mixes as well as wheat germ oil. The company also works under the project of complex deep wheat grain processing and plans to launch production of ingredients with high added value, such as gluten, syrups, starch, and cereals. PAVA takes a very stable position on a highly competitive wheat processing market and strives to gain leadership in all branches of its activity. The company is characterized by innovative approach to production, which is proved by the latest products development, as well as expansion of own raw material resources base and diversifying into highly profitable deep processing. Daughter company Russian Agricultural Division controls over 160,000 hectares of land and plans to increase the land bank to a few hundred thousands of hectares. Access to highly fertile lands, expert staff and in-depth industry experience are key success factors of a future strategy. Apart from that the company enjoys considerable state support in implementing new projects.

Unique Product Range
For 10 years PAVA supplies products of exclusive quality to Russian and foreign clients, famous under the trademark PAVA, Altay-Batyushka, Zhitnitsa. Flour is a main product of the company and is characterized by a high level of gluten and whiteness. Baked goods made from PAVA flour are nourishing and tasty, with refined taste and flavor. The flour is ideal for confectionery, macaroni production, yeasty and puff baked products. PAVA is an umbrella brand under which wheat flour of different grades, rye flour as well as cereals, such as wheat, fine-ground barley, and barley are produced. PAVA brand is positioned in a more expensive group of products and has corresponding style of packing. Altay-Batyushka line includes flour of extra, higher, first and second grades. Altay-Batyushka products are manufactured in different type of packaging, made both of paper and polypropylene. At the end of 2008 PAVA extended its product range developing innovative flour grade Zhitnitsa. This milling technology is unique and does not have analogies in the world. It allows to preserve live cells of grain and is very rich in vitamins and minerals comparing to wholemeal flour. Behaviour of Zhitnitsa in the production process is very similar to traditional flour grades, but it significantly expands output of bread, and thus it results in better profitability of baking business. This type of flour has already become popular among Russian and foreign consumers, and has been successfully recommended as a good cooking component for national cuisine dishes of other countries. PAVA capacities allow to perform orders based on individual customer requirements. Thus, microdosing line established on Rebrikha mill was used to produce flour for supplies within the framework of UN World Food Program. The UN has very strict requirements as to vitamins and minerals composition. PAVA has been UN WFP partner for over 3 years, cooperating with countries of Asian and African continents.

Export Activity
PAVA made the first export supply in 2005 to Georgia and since that time the sales destinations have been considerably extended - not only to neighbouring countries (Mongolia, Uzbekistan, Tadjikistan) but to more far away Asian and African countries. PAVA has experience in dealing with Thailand, Korea, Lebanon, Bangladesh, Somali, Kenya, Ethiopia within the UN WFP and on a commercial basis. PAVA-Export Ltd. company is now dealing with export. This subdivision coordinates logistics effectiveness and competitiveness of pricing. The company sees big potential in entering new markets and therefore aims at developing export activity, including even founding representative offices in other countries. The company develops the client base, not limiting geography of supplies to Russian market. Currently negotiations are going on with countries of Asian and Pacific regions, first of all with China and Korea, where there is a growing demand for flour and bakery products. In 2 years PAVA plans to launch producing of gluten, starch, syrups, spirits and other products of deep wheat grain processing. Preliminary agreements for supplies of food ingredients with Russian and European producers were signed. Global demand for above mentioned products is now unprecedentedly growing, and so the potential for establishing new partnerships. Taking into consideration high quality of products, geographical position and company experience, PAVA is well placed to maintain the positions of leading exporter in the industry in Russia.

Recognition
PAVA’s achievements in export activity, quality of products and effective management have been confirmed by more than 100 diplomas and medals. The most outstanding awards are gold and silver medals of Siberian forum Gemma-2006, Siberian fair, Altay Niva exhibition, the title of prize winner of such contests as The best product of Russia, The Best Altay Product. In 2007 Russian Ministry of Economic Development granted PAVA the status of Leading Exporter of the Industry, when the company accounted for the largest share in total export flour shipments from Russia and entered a number of new markets. In 2008 Ministry of Industry and Commerce declared PAVA the most rapidly growing exporter of the industry, after foreign supplies had grown by 84%.

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