Printing Money28 2015

During the 187 197 years since it was established by order of Alexander 1, this Russian institution has already seen half a dozen tsars come and go, outlived the Soviet Union and survived two world wars; but even so, the Russian governments decisions to restructure it as Joint-Stock company with a remit to expand its activities both domestically and internationally is probably the most momentous in the companys illustrious history.

Ever since the notes that began rolling off its first paper mill in 1818, Goznak has been a trusted partner to successive regimes in Moscow, regardless of their political agenda. Today, Goznak mints five billion coins, and prints seven million banknotes as well as producing up to 40 million passports.

Within this context, President Putins decision to allow the company to spread its wings makes perfect commercial sense, and, although ownership will remain with the state, the move means a lot to the company both psychologically and practically, according to its current General Director Arkady Trachuk.

The change is significant because, firstly, we will be able to grow not just organically but also through a series of mergers and acquisitions, he says. The Board of Directors, will, secondly, now also include

people who represent the owners, have a genuine interest in the development of the company and will have their own opinions and ideas to contribute. These two changes will take place very soon [by the end of the year] and we think they will have a big influence on our strategy.

That is certainly the idea, for one of the Russian governments stated reasons for the 2014 change was that it lacked the ability to make decisions quickly, including to approve major deals and to arrange the loans and bank bonds required to modernize technical equipment and perform scientific research and development.

The opportunity to be able to respond to its clients requirements both proactively and at speed is one that Trachuk intends to grab with both hands. The key message that we want to get across to potential clients is that we can solve their problems, he says. I suppose you could call it the value approach.

In Trachuks eyes, this newfound flexibility and an ability to grow through acquisition as well as organically are two sides of the same coin. A couple of years ago, we wanted to provide one of our customers with some solutions relating to counting and sorting machines, he recalls. These machines are produced by one of our strategic partners in Yekaterinburg, but, due to our different legal
and ownership structures, we were unable to make full use of that alliance to meet our clients requirements.

If we could acquire a part of that particular company we would be able to improve the product and service we could offer our clients. There are about ten such points of growth that we would like to work on.

As well as its dominance in the domestic market, Goznak already has a track record of working internationally. While Europes single currency has limited the companys options within the Eurozone, it has over the years produced coins and banknotes for countries throughout Latin America, South-east Asia and Africa, Middle East not to mention most of the former Soviet republics; and under the new JSC regime, further international expansion is most definitely on the cards.

Our competitive advantage is clear, says Trachuk. We can and do - offer new technological solutions to clients all over the world. We are absolutely reliable in terms of quality and performance and we are also competitive when it comes to price.

Not to mention 200 years accumulated experience and expertise.
Source: Fortune 100, 2015
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