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Sistema SWOT & PESTLE Analysis

ID : 52551953| Jun 2019| 15 pages

COMPANY PROFILE -Sistema

Business Sector :Diversified

Operating Geography :Russia

About Sistema :

Sistema is the largest private investor in the Russian economy. The company was established in the year 1993, and today its investment portfolio comprises stakes in majorly Russian companies in diversified areas of economy like telecommunications, retail, agriculture, timbre processing, high technology, health care, real estate, banking, and hospitality. Headquartered in Moscow, Russia, Sistema has been able to emerge as a major stakeholder in majority of its companies. It focuses on finding synergies of its companies with other opportunities and invests accordingly. Improving operational efficiency is one of the core competencies of Sistema, by which it helps corporations attract industry partners, enhance expertise and reducing risk of investments. Sistema’s global shares features on the London stock exchange and ordinary shares are listed in Moscow stock exchange. Some of the major companies of the group are MTS, Detsky Mir, Segezha Group, Agro holding Steppe, Real-estate assets, BPGC, Binnofarm, RTI, Medsi, and MTS Bank.
The company believes in investing directly through its corporate center into controlling stakes of large assets including distressed undervalued businesses or in large tech companies. Most of the assets with Sistema are mature businesses. According to company policies they acquire assets only when it’s Debt/ OIBDA is less than 3.0 or there is a plan of bringing it down to acceptable limits within two years and the deal size starts from $ 100 Million.
Sistema’s mission is to build an investment company with multi-industry expertise and a strong track record in managing shareholder and third-party funds. Investments focus primarily on new and innovative industries, with no restrictions on geography or industry. Being one of the leaders in its domain it is expanding rapidly in growing economies.

Sistema Revenue :


RUB 704,551 million – FY ending 31st Dec 2017 (y-o-y growth 3.5%)
RUB 680,864 million – FY ending 31st Dec 2016

Competitive Analysis of Sistema

SWOT
PESTLE
The SWOT analysis of Sistema is presented below:
Strengths
Weaknesses
1. High growth companies dotting Sistema’s portfolio
2. Strong Cash flows with reduction in costs
3. Creating new investment funds
4. High transparency in operations
1. Heavy dependence on Russian economy
2. Increase in level of debt
3. Overdependence on MTS
Opportunities
Threats
1. Expanding retail business in more emerging markets
2. Enormous scope of increasing the market share in Russian paid healthcare market.
3. Expansion in e-commerce and retail industries of growing economies
4. Investment opportunity in technology based start-ups
1. Range of lawsuits against its core companies
2. High competition in emerging markets
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Detailed SWOT Analysis of Sistema

 

Strength

1. High growth companies dotting Sistema’s portfolio: With companies like MTS, Detsky Mir, Segezha Group, Agroholding "STEPPE", Medsi, Binnopharm, MTS Bank, RTI, BPGC, MTS Bank, Real estate and hospitality assets in its portfolio, Sistema is currently the major private investor in the knowledge intensive sectors of Russian economy.
Some of its companies are very strong brands e.g. in 2017, MTS trademark was the 9th most expensive Russian brand, with an estimated value $ 1,484 Million. This leading telecom operator in Russia and the CIS boasts of over 106.5 m mobile subscribers. Detsky Mir is the largest children's goods retailer in Russia with over 650 stores and Segezha Group - A major forest holding stands at #1 I Russia and @2 in Europe in paper sacks manufacturing. Kronstadt Group - one of Russia’s leading developers and manufacturers of high-tech products, Mikron featuring amongst Europe’s five largest fullcycle microelectronics producers, and the largest in the CIS and last but not the least - Concept Group - one of the largest players in lingerie wholesale and child wear monobrand store also deserve mention.. The company took many cost control measures so as to maximize its profit potential and as a result the SG&A/Revenue ratio at the corporate center decreased from 1.2% to 0.5% YOY, here SG&A consists of all those expenses which are not included in production e.g. management salary, office computers, etc.

2. Strong Cash Flow with reduction in costs: The company is currently in a strong cash position at the corporate center which have increased by 83% in 2018 (Quarter on Quarter). The inflows have been driven mostly by the dividends from MTS (amounting to RUB 19.3 bn) and non-public assets as well as asset monetization. The company has been able to reduce it liabilities by 6.7% mostly by its own funds. The group capex have decreased by 2.5%.

3. Creating new investment funds: Sistema is in the process of diversifying their sources of investment resources and remodel investment processes. Recently, it has made rapid progress in developing its venture capital and private equity arm. Sistema’s VC funds like Sistema Venture capital, Sistema Asia fund and Rusnano Sistema SICAR as well as other their investment platforms like Sistema finance and Sistema capital provide organizations and other investor’s access to exclusive asset base and proven time-tested investment strategies.

4. High Transparency in operations: A 2017 corporate study conducted by Russian Regional network for integrated accounting which covered 950 companies (80% of national income generation) revealed that Sistema is the 3rd most transparent private investment company in Russia and among top 10 among the public and strategic companies. Detsky Mir which is the children retail chain of Sistema is the leader in terms of transparency in the retail segment and won the Debut of the year category. Sistema also received the Russian Business Leaders: Dynamics and Responsibility award from the Russian union of industrialist and Entrepreneurs (RUIE) for the high quality of sustainability reports and was named in group A, which comprises 12 companies which had the highest individual scores in the responsibility and transparency index.

Weakness

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Opportunity

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Threat

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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Sistema Analysis Report

1. Sistema website - Detsky Mir launches Zoozavr - http://www.sistema.com/investors-shareholders/ir-blog/detail/article/23819/

2. Sistema Financial Report 2018 - http://www.sistema.com/fileadmin/user_upload/results_disclosure/2018/ar_sistema17eng.pdf

3. Sistema sells its ten percent stake to exit reliance - https://economictimes.indiatimes.com/industry/telecom/telecom-news/sistema-sells-its-10-per-cent-stake-to-exit-reliance-

4. Sistema enters Indian retail market to open 10 stores by 2018 end - https://indianexpress.com/article/business/companies/sistema-enters-indian-retail-mkt-to-open-10-stores-by-2018-end-4861186/

5. Russia's 'Acoola' to hit Indian stores soon - https://brandequity.economictimes.indiatimes.com/news/business-of-brands/russias-acoola-to-hit-the-stores-in-india-soon/60826844

Copyrights and Disclaimer

Sistema SWOT and PESTLE analysis has been conducted by Prakhar Mishra and reviewed by senior analysts from Barakaat Consulting.

Copyright of Sistema SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Sistema SWOT & PESTLE Analysis
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