PIROT (Serbia), Mar 9, 2010 -- (InPR) -- interview WITH DRAGAN NIKOLIC, CEO OF THE TIGAR CORPORATION, February 2010
The end of one fiscal year and the beginning of the next are always a good time to pause and reflect on the state of one’s Business and to analyze the factors that drove Business results. As they start their new fiscal year in 2010, many companies around the world are not only performing their usual Business analyses, but are trying to gauge the point reached in the current global economic crisis, the most dramatic since World War I, and to determine to what extent it has impeded them from realizing their 2009 Business plans.
Tigar CEO, Dragan Nikolić, shares his thoughts on the company’s performance during the previous fiscal year and its plans for the new fiscal year in the current Business climate.
1. How did the global economic crisis and the depreciation of the dinar impact your Business in 2009?
An exceptionally difficult year is behind us, particularly given that Tigar is currently in the process of restructuring, making heavy investments in our industrial capacities. As a result, our manufacturing last year was basically reduced to two product lines – footwear and chemical products. Our new technical rubber goods factory, including a plant which is designed to produce finished goods from recycled rubber, will be commissioned in the latter part of March, and is expected to fully contribute to our group’s Business results in 2010. At this time, it is difficult to determine the exact extent of the impact the global economic crisis had on our Business, but it certainly affected our performance and forced us to re-schedule a number of important investment activities because we needed more time to secure funding.
The economic downturn brought about a number of changes to our markets. Entire groups of buyers went under, and the vast majority operated with difficulty. As a result, there were periods of stagnation interspersed with sudden increases in demand, forcing us to rapidly adjust our manufacturing capacities in order to meet requirements.
Additionally, the so-called relative stability in the value of the dinar vis-a-vis the euro and other foreign currencies is very important to us, because it enables us to optimally and preventively plan and minimize our risks. The appreciation of the euro for us, as an exporter, results in an increase to our income convertible to dinars, but at the same time it initiates changes in various price correlations domestically which, together with foreign exchange losses, ultimately affect our bottom line.
When there is a great deal of instability in the market, there are no winners. We could not avoid the effects of the crisis, so our strategy was to stay the course and continue with our development and investment activities, albeit at a pace governed by external circumstances, so that even in 2009 we were able to meet a number of pre-conditions for our future development.
2. What were Tigar’s key activities over the past year, and which were particularly helpful for Tigar’s growth?
In general, our key goals last year were to maintain and advance product and service quality in the face of declining competition, to find alternatives for our non-liquid partners, to service our obligations to the state and banks, to optimize our inventory, to collect on our accounts receivable in a timely manner, to re-finance our loans, and to focus on increased profitability for our new products and services.
In the footwear program, which moved to its new location in 2008, we developed 59 new groups of products, and made major progress in attracting new foreign buyers. With a great deal of effort in development, along with heavy investment in new tooling, we systematically enhanced our quality processes, along with our efficiency and productivity. Many advances were made in cooperation with external institutions, foreign companies, and strategic partners.
Tigar Technical Rubber Goods is up and running after a nine month interval, and the few months in which its new factory has operated have shown marked production process improvements. In parallel with our investment of some eight million euros in the capacities of this new factory, we worked hard on acquiring brands which are well-known in the global market. To that end, we purchased the Business of the Danish company Bilgutex, whose products are sold to Scandinavian countries but are also certified for other Western European markets. By purchasing recycled-rubber product lines, brands and goodwill, we have created conditions for incursion into international markets. Now our commercial division is working on promoting these products and creating a buyer network for them, particularly within Serbia and in neighboring countries.
During 2009, Tigar Chemical Products focused its efforts on maximizing market performance. This Business, too, made inroads into new markets, primarily Greece, which is a major road paint market for us. We also strengthened our relationships and cooperation with a number of large domestic buyers through whom we move a lot of product.
Tigar Trade, our largest commercial entity, focused on upgrading their Business processes, developing their sales network in Serbia (primarily the Stop & Drive automotive service chain and the Bottega retail chain), improving existing quality and introducing new services.
During the year, we also expended a lot of effort in developing a number of new brands, so that today, in addition to the Tigar brand name, we also have Century, Forester, Firefighter, Bilgutex (involving a group of products), Maniera and Brolly brands.
Were there any plans or projects which the management team was unable to realize or had to re-schedule?
Over the past three years, we invested some 23 million euros in development, which attests to the significant financial requirements of the development process and the need to obtain support from various institutions. In the face of the current crisis, financial institutions are reticent in supporting the real sector, which has caused us to lose several precious months of time. Nevertheless, we were able to work through this and establish our modern new rubber goods factory at its new location, capable of high-quality, large-volume production, in virtually any segment, from products for the defense industry to those for the construction and mining industries, and to other industries, including the automotive industry.
3. Your existing industrial location was recently expanded with the purchase of the former Dragoš Industrial Complex. When will this location become operational?
We purchased the Dragoš Complex as part of our strategic goal to expand and round out our industrial activities. We plan to use this space to overhaul our chemical products program and to build a rubber compound mixing plant for our technical rubber goods and footwear production needs; we will also create warehouses for our products as well as a transportation logistics capability. In this way, Tigar 3 will become an optimal, compact and streamlined industrial complex, where both production and Business processes are completely optimized and fully energy-efficient.
4. Your Board of Directors was recently discussing the three-year development plan for the company. How do you see Tigar in 2012?
Although today it seems relatively far away, 2012 will soon be here. All our activities to date, including the restructuring and modernization of our businesses, and our purchase of foreign brands, such as the Century Division of the UK company Hunter and the Danish Bilgutex, have been focused on achieving our goals over the 2010-2012 period, which we expect will result in revenues of some 100 million euros by the close of 2012.
The footwear factory should be operating at optimum capacity within the next two years, and the technical rubber goods factory will have completed its development cycle through the activation of the recycled- rubber products manufacturing capabilities which are currently in the final phases of installation and commissioning. By 2012, we hope to expand into tire recycling, which should have a significant positive financial impact for us, and which will position us as a serious player in the resolution of vitally-important environmental issues in this region and in the country.
5. When do you expect Tigar’s performance in the stock market to mirror its actual Business results?
Unfortunately, up until now, we have not had the pleasure of seeing this. When we delivered our best performance, the stock market reflected quite the opposite, which is hard to understand because the real value and potential of the company is not mirrored in the value of its stock. I am convinced that once the stock exchange consolidates through the addition of more leading companies such as Telekom, the Petroleum industry of Serbia and the Electric Power industry of Serbia, and if they appear on the prime market, there will be a larger stock-trading volume, more depth, easier buyer entry, easier exit at sale, or, in other words, all the currently-lacking elements which depress stock value for listed companies, including Tigar, and do not reflect the actual potential of the industrial sector that has real Business power and delivers good returns in the market.
Our responsibility as management is to set the stage so that the company is firmly on its feet, that it operates with stability, that it continues to support its developing product lines, that it increases its market share and its revenues, that it improves its Business performance, that it remains liquid and settles its financial obligations, and that it continues to be solvent. This segment of our Business policy continues to be our focus and we invest all our efforts to maximize performance in that area. Tigar is, and will continue to be, a stable organization, an excellent and reliable partner, with real potential, such that, along with Tigar Tyres, which evolved from the successful cooperation between Tigar and Michelin, it continues to be a success story and to drive progress in this region.
6. Is it correct to say that 2010 has started with a great deal of optimism and do you expect this year to be as challenging as the last year?
We have begun another challenging year, but this time we are equipped with much more effective tools and significantly upgraded technical capabilities than a year ago. As such, we should be much more optimistic about reaching our annual goals. However, we have to work very hard to produce and deliver quality products to the market, particularly in this day and age of contemporary Business practices where products can be secured easily from the world over, and strong communication between continents gives transparency to our segment. Only quality products will guarantee success in the harsh reality of competition. For that reason, efficiency in all segments, support and advancement of human resources, and, above all, the awareness that we are responsible for our own Business performance and will not be gifted with things we do not create, will continue to be key imperatives as we pursue our ongoing Business commitments.
Source: Tigar AD, March 4, 2010
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