The company's managing director, Mindaugas Gedvilas, told CEE-FoodIndustry.com that it is in discussions with national banks to secure an LTL100 million (€28.96m) to help finance a project to start production of wheat starch and vital gluten, as well as maltose and glucose syrup. These ingredients, all produced as a side-line to the company's mainstay wheat milling operations, broadens its wheat related products portfolio, while bringing about a number of profit enhancing synergies.
The project would lead to the construction of a new facility in Panevezys, Central Lithuanian, with the capacity to process 200,000 tons of wheat. Construction is mooted for the beginning of 2005 and the facility is scheduled to start production in the first quarter of 2006.
"The ingredients will mainly be supplied to bakery businesses in both the Baltic states and the Nordic countries, namely Finland and Sweden," said Gedvilas. "The vital gluten is used as an improver for flour in the bakery industry, as are the syrups, which are used as sweetener. The wheat starch, on the other hand, will be focused on paper producers in Sweden and Finland."
The company has so far managed to secure LTL50 million to finance the new facility, through a syndicated loan provided by Vilniaus Bankas, Nord Lietuva and Nordea Bank Lietuva.
Malsena's move into the ingredients business comes in the wake of its debut as a multi-functional food producer this year, when it expanded from flour milling into pasta production. The flour milling sector in the Baltic States is already highly competitive, so the company had decided to turn its hand to multi-functional production as a means of expansion.
Malsena is the leading supplier of flour to bakery companies in the Baltic states and is strengthening its position as a regional pasta supplier. Only this week the company announced that it had formed a 50-50 joint venture with local pasta player Gintarinis Amzius, giving it the leading position on the Lithuanian pasta market.
"Through this venture our aim is to grab a 50 per cent share of the growing Baltic market for pasta production," said Gedvilas. "This would mean pushing up production to 1,000 tons per month, which is easily achievable as the current capacity of our new facilities is 1,500 tons a month."
The company has invested €2 million in the new pasta line, which is hoped will increase Malsena's turnover by at least 15 per cent.
Gedvilas also said that he is hoping Malsena will be able to distribute its pasta beyond the Baltic states and is currently looking into the possibility of expanding into both the Polish and Russian markets. However, he added that the company's ambitions for the Russian market would depend on how competitive EU grain prices are compared to Russian grain prices.