Zoran Drakulić: A year of big investments

If we realize all we have planned, by the end of 2008 we could reach a 1.5 billion, perhaps even 2 billion turnover

The purchase of river fleet, that is the Austrian firm ‘’DDSG Kargo’’ is just the first in a range of planned investments of ‘’East Point’’ in this year – says Zoran Drakulić, the president of this company.

In the interview for Magazin Biznis Zoran Drakulić announces this year as a year of great investments of his company, and that means, he points out, the purchase of more ships, construction on new silos in Constance, Romania, building of a new bakery of the Belgrade Bakeries… And there is still the unfinished story of RTB Bor (Copper Mining and Smelting Complex Bor).

You have set out „with full sails“. You started in 2007. with Danube and it seems as though you measured your plans by its width.

– It tuned out that way and that will, I hope, be good. This year is ‘’East Point’’ a year of great investments, and, if we get to realize all we have planned, we could by the end of 2008. we could reach a 1.5 billion, or perhaps even a 2 billion turnover.

 What is the scope of the “East Point” turnover at the moment?

– Now it is about a half a billion dollars. We are planning to triple the turnover in the next two years.

Is your ownership share in “East Point” still 40 percent?

– No, that is completely different now. With the growth of investments we have received new investors within ‘’East Point’’. Therefore my ownership share has decreased significantly.

Where does such an investment boom precisely this year come from?

– The volume of transportation via Danube is increasing every month and we are faced with a choice: either to enter on a purchase of ships, formation of our own river fleet, or to put in danger everything we have created so far. Namely, from our silo in Constance we transport around 1.1 billion tons of grain yearly and it happened at certain periods of the year that there were not enough ships available and that deliveries were late.

Has Zoran Drakulić given up on politics?

I am not thinking about a political engagement at all, at least not for the time being. My preoccupations are now directed to new development routes of ‘’East Point’’ and I consider that what I am doing now is far more important for Serbia than if I was engaged in politics. In the political atmosphere present in Serbia today that would be a waste of time. There is nothing productive there.  

Now we are expanding the silo in Constance, our plan is to reach 2.5 billion tons grain by the end of 2008, which means barges will be needed. And together with grain there will be a call for the transportation of ore and other goods, because transport via Danube is by far the cheapest route. Instead of renting boats from others, we will be the ones renting them to others.

Are you planning to expand the river fleet further?

– Yes, straight away. We are interested in the purchase of the Yugoslav River Shipping, but not by waiting for a bid invitation, rather we will be buying on other markets as well. Just now we are negotiating with the Czech…., at the moment we are inspecting the quality of the ships. So that in the meantime we will be buying all that appears in the market and is of good quality and matches the price.

You bought the Austrian river fleet jointly with the American investment fund ‘’Templeton’’. Where does the partnership come from?

– Yes, one of the financiers is the American investment fund ‘’Templeton“. We met them a year ago. They were here, offered us even then to participate with us in projects and now there was the opportunity. We have a good relation with other American investment funds as well. We also had talks with the two biggest investment banks – ‘’Stanley Morga’’and ‘’Merrill Lynch’’ concerning this and our other projects. Within this financial scheme concerning the takeover of the Austrian company ‘’DDSG’’Austrian banks participated as well, and I would like to mention Hypo Bank in particular.

 You are continuing the construction in Constance as well?

– We are building new silos, apart from this big one which at the moment the largest in the Black Sea area. Total capacity will be about 180,000 tons, and a 45,000 silo will be for soy crushed oil seeds only. That will enable us to unload the barges carrying grain to Constance quickly and immediately load them with soy crushed oil seeds and send them back to Hungary. Thus our barges will be full in both directions.

A part of the project we are working on at the moment is the construction of a few tanks for liquid cargo: oil, ethanol…

You are sailing to Romania, and the Romanians are coming to you, to RTB Bor. Is that only a coincidence?

– The investors are after new investments and for that reason such overlap is possible. I do not know how realistic it is to close the deal with ’Kuprom’, given that the deadline for negotiations on the sales contract has been extended. If they give 400 million for RTB Bor, realize all they named in the offer, all that is left for us is to congratulate them. We consider that the price of 400 is too high for what is being bought.

Will you still be procuring semi-manufactured goods for the copper rolling mill in Sevojno in Bor or will you turn to another destination?

– It would be good to continue buying copper in Bor. It would be ideal, of course, if RTB Bor represented our complete production chain. However, it will not shake us even if we have to buy on another market. That could for instance be Bulgaria which is precisely this year erecting a new facility for electrolysis, which will boost the quantity of cathode copper from the current 40,000 tons to 180,000 tons by the end of next year. There will be, therefore, enough copper for everyone. We would have increased expenses due to transportation, but on the other hand, since that country is now in the European Union, we would have no export duties.

In case that the negotiations with ‘’Kuprom’’, however, do not result in signing the sales contract, will you still be competing?

– If there is such a turnout we will accept and realize that. When we were applying for the tender for ‘’RTB’’ we stated that the offer we were giving was binding and we stand behind this.

Have investments into Belgrade Bakeries also been planned for this year?

– Yes. We bought this enterprise last year and in the past few months we have been working on its organizational and financial consolidation, and the central project will be the construction of entirely new facilities. We have already bought a site in Surčin and we are planning an investment of 20 million euros to make a modern bakery there. We will dislocate production, which is now in the city, and we are negotiating with McDonalds about taking up the roll production for them in that new factory.

In all these enterprises you bought through privatization in Serbia how many employed are there now?

– In Serbia that is about 4,000 workers. We never had any communication problems with the workers. Firstly, when resolving the redundancy issue we did not fire a single worker, but they left voluntarily on the basis of the social programme. On the other hand, the salaries are regular and on the level of the average Serbian pay, but we would be increasing them at a greater pace if we did not have such a bad business surrounding. I hope that the future government will pay attention to that, on the treatment of production which is generally bad, and the export results disastrous.

What is the share of the business you to in Serbia in the total business of ’East Point’?

– The business in Serbia makes up about 50 percent of the total business of ’East Point’. The other half is the business we do in Romania, Russia, Ukraine, Kazakhstan, China … In total around 70 percent of our company export goes to the European market and 30 percent to America.

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