Severgroup company reports on a new strategy for the development of the group's power engineering and electrical assets

31 may 2019

Severgroup LLC (Severgroup), a private investment company managing the assets of Alexey Mordashov, reports on a new strategy for the development of power engineering and electrical assets of Severgroup, under which the business model of the Power Machines group is being updated.

"The changes are intended, firstly, to ensure responsiveness and agility in in decision-making. Secondly, to improve the efficiency of each enterprise due to more freedom for the operational activities and the responsibility for the ultimate result. Thirdly, we should ensure the prompt introduction of new products to the market and the effective development of promising trends. Our ultimate goal is to become the major integrator of energy and electrical solutions, the leader of future power engineering and the first choice company for our customers," says Alexey Mordashov, the Director General of Severgroup.

It is long overdue for the updating: the current business model of Power Machines, which is based on a rigid chain of command in all operational processes, is not able to respond in a flexible manner to market changes, quickly master new technologies, dynamically develop new promising trends.

For these purposes, the decision has been taken on the decentralization of Power Machines assets into independent business units, and a management and investment company NordEnergoGroup LLC (Severgroup's subsidiary company) has been established to control these units. The Director General of NordEnergoGroup is Alexey Mordashov.

In the process of decentralization, the assets of Power Machines will be divided into four business units, grouped by products: 1. Large generation (PJSC "Power machines»); 2. Small and medium generation (OJSC "Kaluga Turbine Works"); 3. Heat-exchange equipment (PJSC TKZ "Krasny Kotelshchik"); 4. Electrical engineering (Power Machines – Reostat Plant LLC).

At the first stage, the shares of OJSC "Kaluga Turbine Works", PJSC TKZ "Krasny Kotelshchik", Power Machines – Reostat Plant LLC were transferred to NordEnergoGroup. The relevant transactions took place in May 2019.

Business units will become independent product centers, providing a full production cycle – from the procurement activities to the commissioning of equipment and the customer service. To manage each business unit, an independent customer service strategy will be worked out, aimed at improving the business efficiency, which is expressed not only in the pursuit of maximizing the production load and controlling the costs, but also in the improvement of products. As a result, the reorganization will allow businesses to improve the customer service and adjust to the requirements of the markets where they operate.

One of the NordEnergoGroup areas will be the expansion of the asset portfolio by investing in new promising trends and small technology companies, complementary to production and processing chain and sales channels. New products or solutions can be both integrated into business units and developed as an independent area. As a part of this area, previously, NordEnergoGroup has completed the acquisition of 74.99% of the shares of energy service company, LLC "SZD Engineering", developing projects of industrial processes and technologies to improve energy efficiency.

The decentralization process will be as transparent and balanced as possible, respecting the interests of both owners and personnel. The company transformation will be accompanied by a thorough development of the new management system and structural relations, the changes will be made progressively during 2019-2020.