OJSC "Almaty Kus" (Kazakhstan): brief description

/KASE, Apr.11, 00, Galina Tsalyuk, republished due to the company shares were entered into "A" listing/ - OJSC "Almaty Kus" began in March 1998. The company was founded by uniting the assets of four poultry farms of Almaty region: JSCOT "Altyn Kus" ("Chapaevskaya"), JSCOT "Fenix" ("Kaskelenskaya"), JSCOT "Abai" ("Abaiskaya") and OJSC "Avatskaya prtitsefabrika" ("Avatskaya"). Prior to the registration of the company three of these poultry farms were under the trust management, and then they went under the control of "Concern Seimar": JSCOT "Altyn Kus" (65.1% of shares), JSCOT "Abai" (72.1% of shares) and JSCOT "Fenix" (48.0% of shares). In early 1998 JSC "Altyn Dirmen" transfers 66.0% of OJSC "Avatskaya ptitsefabrika" shares to the concern as the debt settlement to one of the subdivisions of "Concern Seimar". Apart from the assets of four poultry farms, "Concern Seimar" contributed to the authorized capital of the company the trade mark "Seimar". In September 1998 JSCOCT "Concern Seimar" exchanges the shares of JSCOT "Altyn Kus" (34.9%), JSCOT "Abai" (27.9%), JSCOT "Fenix" (52.0%), and OJSC "Avatskaya ptitsefabrika" (34.0%), whose owners were private persons - employees of the poultry farms, for the shares of OJSC "Almaty Kus". As a result of the exchange, 2,116 shareholders-private persons become direct owners of OJSC "Almaty Kus" shares. In spring 1998 a decision was made to consolidate the assets of four poultry farms into one company, and on March 13, 1998 open joint stock company "ALMATY KUS" was registered. Authorized capital of the company was formed by joining the assets of four poultry farms of "Concern Seimar". The concern has also added a trade mark "Seimar" into the authorized capital. In September 1998 JSCOT "Concern Seimar" exchanges the shares of JSCOT "Altyn Kus", JSCOT "Abai", JSCOT "Fenix" and OJSC "Avatskaya ptitsefabrika" owned by private persons - the employees of the farms into the shares of OJSC "Almaty Kus". As a result of the exchange of 2,116 shares, private shareholders became direct owners of the shares of OJSC "Almaty Kus". From the time "Concern Seimar" took the management four poultry farms underwent reconstruction of their buildings, equipment and poultry cells. The number of poultry was restored and the egg powder workshop was put into operation at JSCOT "Abai". At JSCOT "Altyn Kus" the number of poultry was doubled and new technological line - forage and mixing workshop was put into operation that will supply the farm with the foodstuff with balanced microelements and vitamins. Four poultry farms (Chapaevskaya, Kaskelenskaya, Abaiskaya and Avatskaya) had debts at the end of 1997. In 1998 the company was able to strengthen its positions on the market by increasing the intensity of the production, as well as by attaining the high quality of products while keeping the costs low. Presently, the company is the leader on the national market among the producers of eggs, with almost monopoly position in Almaty and Almaty region (more than 80% of the market), and produces more than a third (33%) of the eggs consumed in the country. The company does not produce eggs and poultry meat. In general structure of the production and sales OJSC "Almaty Kus" is a coordinating and controlling body, and the other segments depend on it: - it controls the production process and the lessors to whom it leases the property of the poultry farms and the trade mark "Seimar"; - it analyzes the prices of the distributors, competitors' prices and purchasing power of each region. The relationships between the company and the lessors are regulated by the agreements. The lessors are responsible for buying and production of feeding stuff, production of eggs at their leased poultry farms and sale of eggs to the distributors only. The lease (franchise) of the trade mark "Seimar" means the transfer of rights to use it on a contractual basis to twenty four independent distributors. The distributors are responsible for purchasing, sorting, packing, transportation and sales of the lessors' products. Distributors can buy the products only from the lessors and only at prices set by the company. Each distributor has an exclusive right to distribute the products of "Seimar" by presenting this trade mark in a certain region, where it can set its own sales prices, sign contracts with retail sellers and specify its own sales policy. The company, in its turn, strictly monitors the quality of the products offered by the distributors on the market. To implement short-term programs of restructuring and expansion of existing production in order to diversify the activities and to enter into new markets, on April 6, 2000 the company issued its bonds for 4,500,000 U.S. dollars. goal of the issue is to raise funds to reorient Avatskaya poultry farm to produce broiler meat and to put into service the workshop for deep processing of chicken meat on the basis of butcher workshop of Abai poultry farm. OJSC "Almaty Kus" has other long term plans: - to conduct breeding in order to improve the productivity of the poultry; - further restructuring of egg production in order to increase the efficiency and to lower the cost of the eggs and related egg products; - restructuring of egg production by dividing the poultry farms into small poultry cells to be leased to the farmers. The works done by the company to the farmers: - centralized supply of feeding stuff; - delivery of poultry; - leasing of the equipment; - purchasing the products. Results of the restructuring: - lowering the cost as a result of the reduction in administrative expenses of the poultry farms; - creation of highly competitive environment among the farmers. Strategy on increasing the product competitiveness: - mass advertising campaign about the quality of "Seimar" eggs; - low cost of egg products that allows the company to follow an effective pricing; - dynamic distribution network that immediately reacts to the appearance of the competitors by decreasing the price in that region without decreasing the general prices within the network. The company is a member of the International Egg Commission, which represents the interests of egg producers throughout the world. The members of the committee are the companies from the countries that produce eggs and Article Numbering Association, which is meant to unify international goods numbering system and bar codes. As of October 31, 1999 the company had 12 employees. It has no branches.