New Frontiers ahead of us
Alageum Electric is a joint stock company with innovative electrical plants to produce complex transformer equipment of the global energy standard. The Company has its design and research institutes, as well as engineering and service centers to construct and modernize power facilities for large power distribution companies and major regional power systems. Erkebulan Iliyasov, Chairman of the Board of Alageum Electric JSC, answers questions from a Kazakhstan magazine.
What was the objective when creating the Alageum Electric brand? What progress has been made while developing the brand to date?
In 2007, the Kaztransformator Company was rebranded aimed at achieving a totally new international level of development. That was the beginning of the Alageum Electric Company’s modern history. Nowadays the Company occupies almost 70% of the Kazakh market of the electric machine industry. The Company’s activities cover the designing of 35–110 kV energy facilities and modular substations, manufacturing of 10–35–110 kV power transformers and modular substations, and installationand start-up works. The Company owns facilities which allow running its various businesses. These include an industrial energy design institute, the Kentau Transformer Plant, the Almaty Electromechanical Plant, Nur-Stroy Ltd, a construction company, a metal works and components manufacturing plant in Shymkent, Kaztransformator, and the ELMO JSC. The holding with its vertically integrated structure has branches in all major cities making it very effective and convenient to provide a complete list of turnkey services with post-sales support to the customers.
The rate of production growth won’t fail to impress anyone when recalling the history of the Kentau Transformer Plant which was on the verge of bankruptcy in the early 1990s. Now it is a successful company with its revenue increased by almost 100 times. Last year, the Expert RA-Kazakhstan agency included us in the list of leaders. They called us ‘the most dynamic company in the engineering industry’. We are confident that we will be happy with the results of 2012 and the expected growth should reach at least 25%.
The primary measure of success of any domestic company is its wide presence in foreign markets. What is the Alageum Electric’s export strategy?
Yes, you're right – we seek gaining a strong position not only in the domestic market. We also want to provide our neighboring countries, such as Russia, Uzbekistan, Tajikistan, Turkmenistan, and Kyrgyzstan, with our products. Today, the share of exports has reached 35% of our products and in this term we steadily compete with the manufacturers in Belarus, Ukraine and Russia.
In June 2012, an agreement on an official representative office was signed with the Enerteks LLC in Moscow whereby our Russian partner acts as an authorized dealer of the Kentau Transformer Plant (KTP). Co-operation has helped to expand the geography of our supplies from Pskov and St. Petersburg in the west to Chita and Krasnoyarsk in the east and from Gubkinsky and Syktyvkar in the north to Sochi and Astrakhan in the south.
Large energy corporations, such as the Holding of Interregional Distribution Grid Companies, Rosatom State Corporation, Oboronenergo JSC, E4 Group OJSC, NESKO JSC, Bashneft JSC, Electroschit PKF LLC, and many others have become Enerteks customers and consumers of KTP products.
The official representative office will be developing the dealer network and establishing service centers in all key regions of Russia. Dealer contracts and orders for the first lots of equipment have been signed with companies located in the major industrial centers of Russia, Ural (Yekaterinburg) and Siberia (Krasnoyarsk) federal districts.
Dealership agreements will soon be signed with companies in the North-West (St. Petersburg), Volga (Nizhny Novgorod) and Southern (Rostov-on-Don) federal districts. Thus, the dealer network will cover all of the plant's strategic industrial regions of Russia.
In 2013, we plan to open offices in the capitals of other CIS countries, such as Tajikistan, Turkmenistan and Azerbaijan.
What investment projects are in your opinion significant for Alageum Electric? In what areas will the modernization process will continue?
One of the recent major investment projects was the construction of new workshops (electrical insulation shop, machine-assembly department, and wire workshop) as part of modernization of the Kentau Transformer Plant. The amount of investment was more than $12 million; 120 new jobs were created in the area of the export-oriented production of wires, outdoor complete switching equipment and low voltage equipment.
The Kyzylorda industrial combine for building materials and structures has recently become part of the Company. It specializes in reinforced concrete products.
In general, these differently oriented business processes cover both modernization of the existing enterprises and introduction of new ones. Further investment plans will be continued in cooperation with the DBK-Leasing JSC under Business Road Map 2020 for smooth and gradual upgrading of production equipment at the Transformer Plant. In 2013, the modernization will get about $10 million.
In addition, a construction project has been started to build a new transformer plant in Uralsk where 6–10 kV transformers will be manufactured targeted to the Russian market. It is planned to build another transformer plant in Shymkent. This will be the first plant in Kazakhstan to manufacture 110–220 kV class transformers.
As far as we know, a Kaizen project has currently been implemented at the Kentau Transformer Plant. What do you expect from the introduction of this system?
Applying Kaizen tools helps in optimization and continuous improvement of all processes in manufacturing and business management. This system is both simple and complex. Its essence is in finding the bottlenecks in processes, detecting hidden reserves and eradicating through specific Kaizen tools. This improves productivity and product quality and reduces production cost.
To date, two steps of the Lean Manufacturing at the Kentau Transformer Plant Project are completed. The first step involved detecting of losses by process mapping (photographing). In the course of its implementation, more than 120 problems were able to be identified. A set of actions for some of them were offered with others that need to be further examined.
The second step was the implementation of the Standardization tool. Observations at each workplace revealed great potential to reduce the loss of working time at specific sites, for example, during assembly operations (moves, searching for tools and accessories, and clearing of defects of the previous stages of the process). In particular, the loss of working time reached 3 hours at the finished product warehouse, 60% of the working time in the area for packaging transformers, 43% of the working time at the assembly site for medium transformers, and so on.
As a result of application of Kaizen techniques, 32 possibilities were identified to improve the business processes. For example, the cycle time in the area for packaging transformers was improved from 37 minutes to 18 minutes with a view to bringing it to 10 minutes. Time saving of 15% was reached at the site for assembling medium transformers. And this is not the limit. The project proved to be effective and work in this area will continue.
What are the principles of corporate social responsibility of Alageum Electric and how are they implemented in practice?
Corporate social responsibility principles are important guidelines on the way to the Company's international business standards. Following them is a priority not only for the top management but also for each employee.
Ensuring safe working conditions is one of the fundamental principles. This is more than just providing work clothing, footwear, personal protection equipment, and an annual medical routine examination but also daily transportation of employees to and from work by Company vehicles. The Company rents and buys homes for particularly promising professionals, etc.
We are interested in developing human resources through training, retraining and advanced training. The costs for this purpose amounts to 3% of the total annual income, with 60 000 tenge per worker annually.
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