About what has been achieved and planned

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Interview with Sales and Marketing Director S. A. Kildyushev

This year SGK will celebrate its 70th anniversary. How do you assess the company's current results and prospects?
What is 70 years for a large manufacturing enterprise? This is a certain accumulated historical experience and accumulated historical values. These are employees who work at the enterprise for 10-15-25 years. This is a large-scale legacy – with its own pros and cons.
SGK has been a market leader in the production of high-strength gypsum for decades. However, when a company holds the lead for such a long time, it becomes a hostage to the situation: it begins to seem that everything is already good, and this will continue forever, and there is no need to change anything. However, the market is changing, and the company must change with it. Therefore, when the new management came to SGK, the company took a course for changes. New technologies, new production facilities, and new product lines have emerged. A plant for the production of dry building mixes was opened, followed by a plant for the production of European standard pazogrebnevyh plates. We have developed a marketing strategy and a transparent commercial policy. The way we communicate with our clients has changed. And, most importantly, a stable team was formed. Today SGK is a successful company where people want to work, and all personnel changes are now associated exclusively with the expansion of the staff. Thanks to the effective work of the team, we see the result. FORMAN has already entered the top 15 manufacturers of dry building mixes in Russia and has become the first in terms of sales in the Samara region. And most importantly, we are not going to stop there.

How do you see the development of SGC in the coming years?
The strategy for the next 5 years includes intensive development, sales growth and market share. We have a clear idea of where we are going and in which markets we plan to develop. Last year, we completed a full cycle of vertical integration. At first, the SGC was exclusively a production site, then a raw material production site. We have purchased a quarry, started development, and are now running a full cycle of gypsum stone extraction and processing. Due to the fact that raw materials come from our own quarry, we do not depend on the pricing policy of suppliers. This year, we will fully load the production line at 100% capacity. The pazogrebnevy plate factory, which we opened just a few months ago, is now operating at full capacity, and we plan to further increase our production capacity. The plant for the production of gypsum mixes will be modernized, which will also result in an increase in capacity. We plan to increase the production of gypsum binders and increase the processing of natural gypsum. However, we do not have the task of being a supplier of raw materials. Our goal is to be a provider of ready-made solutions and get closer to the consumer.
To date, FORMAN has entered the top 15 manufacturers of dry mixes in Russia in just 5 years of its existence. This means that even if 50% of the market collapses tomorrow, we still have a lot of room for growth. We are positive, we do not stand still, we are looking for new markets and directions. SGK employs one of the best Russian technologists, who at one time created one of the leading dry mixes production facilities in Russia. Internal confidence, effective teamwork, and the ability to respond quickly to any situation-all this allows us to achieve success.

Does SGC plan to expand geographically?
We understand that the availability of products is important for the consumer. And we have plans to open production facilities in other regions in order to be closer to the consumer. We have chosen the territories where we plan to expand – the Urals and Eastern Siberia are our priorities. We are looking for reliable partners there. Initially, we plan to place orders at other enterprises: it may not be so cost-effective, but it contributes to the formation of brand awareness. And after reaching a certain volume of product sales, you can already go out with purchase offers, partnerships, etc.

New in product policy
The cornerstone decision was to move away from the product strategy to the market one. Previously, we had high-strength gypsum, then there were pazogrebnevye plates and dry mixes. Turning to the client's side allowed us to study the markets in detail and focus our attention on the target ones. Our product policy is based on customer needs and involves the implementation of new ideas in the direction of specific products for a specific customer. We offer more than just a hot water supply system: we have medical, dental, grouting plaster, "Kamnedel", "Sculptor". This has never happened before. For some, we offer new products, for others - traditional ones. In addition, we understand that there are consumers who are willing to pay for high quality, and there are those for whom the main value is the minimum cost of a square meter. Therefore, the line includes both premium quality products and products at an affordable price. The paradox is that on the one hand SGK is a supplier of high-strength gypsum to the majority of dry mix manufacturers, on the other hand, in the market of dry building mixes TM FORMAN produced by SGK CJSC competes with the same manufacturers.
If we talk about dry mixes, then today the consumer needs an inexpensive, but at the same time high-quality, "conscientious" product. We have found this niche, so we successfully compete with both multinational companies and cheaper brands.

What's new in SGC's sales policy?
There have also been big changes in the sales sector over the past year. We have developed a clear commercial policy and changed the format of communication with our clients. When it comes to dry mixes and pazogrebnevyh plates, we rely on distributors. As a distributor, we consider a company that is focused on long-term work with us and does not give priority to short-term benefits. As a result, such a company receives significant preferences from the SGC. But, on the other hand, we have a list of requirements that it must also fulfill.
As for sales of high-strength gypsum, we use the services of distributors, but we strive to ensure that every consumer is a partner directly to SGK. Why? For the industrial consumer, the cost is important, thanks to which they can influence the cost of finished products, as well as the delivery time and availability of goods. When the supplier-buyer chain is extended, the time frame usually increases, which does not happen when working directly. And to ensure the availability of products, we plan to develop a system of regional warehouses.

Now foreign manufacturers of dry mixes are entering the Russian market. Is SGC able to compete with them?
To build a sustainable business in Russia, you need to have your own production facilities here. Those companies that have followed this path are beginning to successfully compete with Russian manufacturers. However, foreign companies often encounter Russian specifics, including a completely different production culture. This is why many customers often complain about the loss of quality after opening factories in Russia. Even if the manufacturer claims "stable German quality", practice shows that the quality of the product varies from region to region.
On the other hand, Turkish-made dry mixes have flooded into Russia in recent years. These are very cheap and often not very high-quality products that do not bring anything good to the end user, because there is a risk of getting a product of poor quality. But for a network of dealers, such a product is convenient, because it makes it possible to sell it at a higher mark-up. So now the Turks have a large share of imports in Russia.
In general, to evaluate the company's performance, it is very important to choose the right starting point. For example, if you compare the annual production volume, it is difficult for SGK to compete with such industry leaders as, for example, Knauf. However, if we analyze the growth, Knauf's growth rate over the past year was about 2%, while SGK's growth rate was 34%. This is an indicator that you can rightly be proud of!

In recent months, many fear a total increase in prices due to jumps in the exchange rate. Is the SGC looking for some ways of compensation?
The impact of the currency is certainly significant for the global economy, but in our business it is small and is mainly due to the purchase of expensive European chemicals, 100% of which we buy in Europe and which we use in the production of dry mixes. As for gypsum products, we do not depend on the foreign exchange market at all. Dry mixes account for about 40% of our production volume, and the share of chemicals in them is about 15%. Of course, we have to react to market changes. Last year our prices were kept at the same level, this year we have to raise them in the second quarter, but the changes will not be significant. Now we are developing a set of measures to increase the value of our product, so as not to shift the increase entirely on the shoulders of consumers.  

What do you think is the perfect dry mix?
All our products are manufactured on the basis of high-strength gypsum. Why? This is a material that provides the product with a new level of quality. GVVS in any composition creates certain unique properties, gives manufacturability, which can not be repeated on construction gypsum. High-strength gypsum is not only high strength. It is fundamentally different. A good example is self - leveling floors. What is the purpose of this product? Creating a perfectly flat surface on any foundation. At the expense of what? Due to the fact that the GVVS in the composition provides better fluidity and the necessary strength. Construction gypsum itself has a loose structure and low strength. Accordingly, the product prepared on its basis, a priori can not have high strength characteristics. While GVVS provides high strength and maximum fluidity. Therefore, the production of products based on high-strength gypsum is an advantage that is emphasized by all major market players, including foreign ones, who apply this practice. 
In addition, the ideal blend is one that minimizes the presence of chemicals. Of course, it is absolutely impossible to do without it, since chemical additives allow you to get properties that cannot be achieved using just mineral gypsum. But the less chemistry in the composition, the lower the value of the human factor and the associated risks.

Now the real disaster has become a construction counterfeit. How protected is the SGC from this?
Of course, it is easier to sell a well-known brand than an undisclosed brand. And today there are cases of counterfeit SGK products. In some construction markets of Samara, there are plastic packages with an insert that indicates that the contents were made by our plant. It is mainly the end user who suffers from this, who gets a "pig in a poke" instead of a product of decent quality. For the SGC, these local cases do not create problems. However, since we are interested in ensuring that the consumer receives a high-quality product, we are now working on the possibility of producing gypsum and dry mixes in packages of 3, 5, 10 kg, so that the private owner, being confident in the quality of FORMAN and who does not need packages weighing 20-25 kg, can buy our putties and plasters.

Where can consumers find information about your products?
Ready-made solutions immediately appear on our website. Our customers can find out about all new products long before they go on sale on our expert website Samaragips, where you can find a lot of useful information, including answers to complex construction and production questions, world news of the gypsum industry, etc. Now the site has a very high traffic – both because of its content and thanks to the convenient navigation, which we also developed based on the needs of the consumer. In order to find the necessary information, the consumer does not need to understand the subtleties of putties, plasters, etc. They can immediately go to the section that is relevant and interesting to them. For example, for doctors there is a section "Gypsum for traumatology and dentistry", for builders "Dry mixes" or "Construction gypsum".  There the consumer will find everything they need, including ready-made solutions and new products. 


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