Elka has bought the Promet property, not the production palette

JURAJ HRÚZ
the reporter

The year-long bankruptcy proceedings of Promet Ltd. Kremnické Bane engineering company ended with the sale of its property to the company Elka, a. s., Kremnické Bane. On April 16, 2000 Elka bought the complete area of the former Promet for an unknown price. The advantage is that production capabilities of the company remain preserved, but the factory is in such bad shape that investing into its renovation will be necessary, says Mr. Miroslav Hudoba, the company manager, who in the past was a member of the board of directors of RR Wusam, a. s., Zvolen, an engineering research company. As he put it, many things are in accident condition. For the time being, he does not dare to estimate the cost required for Elka's future investments.

Up to now, the production palette of the company consists of electric oil-filled radiators produced with various output and in various shapes. The search for additional production assortment is ongoing. For the time being, Elka is working with 65 employees, up to the year's end and another 40 people are expected to be employed. According to company plans, sales of approximately SKK 40-50 million should be reached this year. In the medium-term, the enterprise should be reaching sales on the level of SKK 250 million and employ about 150 people in total.

According to Mr. Hudoba, the company does not reckon on the continuation of the previous production line of Promet because that company did not own the trade network and the marketing of its products was not secured. Moreover, it manufactured rather obsolete products.

At present, almost 100 % of Elka production is exported to Sweden, where the Wosab company is established. Elka concluded with Wosab a 10-year contract which warrants for taking its products in a total volume of SKK 800 million. The subject matter of the contract includes oil-filled radiators destined for the Swedish market. That is to say that a government-supported exchange programme involving directly-heated chassis, or forms, for indirectly-heated ones is in progress in Sweden now. That's because Swedish experts have discovered that with direct heating, the combustion of carcinogenic dust particles occurs.

The Swedish market is also advantageous in that electric power prices fell there recently and that increased the demand for electric heating. Moreover, in the sale of electric heating units the government exempts the indirect units from value added tax. During the upcoming years, the exchange of five million heating units is expected. According to Mr. Hudoba, the Slovak market is not attractive in this field for the time because of the high electricity prices.

The Swedish market is also advantageous in that electric power prices fell there recently and that increased the demand for electric heating. Moreover, in the sale of electric heating units the government exempts the indirect units from value added tax. During the upcoming years, the exchange of five million heating units is expected. According to Mr. Hudoba, the Slovak market is not attractive in this field for the time because of the high electricity prices.

Promet was initially a plant engaged in production of accumulation furnaces, frames for computer technology, metal frames supporting furniture and components for production of electrical appliances. In May 1998, the company went into the bankruptcy proceedings which, due to procedural faults, were declared again by the court in February 1999. Debts of the company had reached about SKK 200 million. The largest creditors were the Investment and Development Bank (IRB), a. s., Bratislava, and the Rudné Bane (Ore Mines), š. p. Banská Bystrica. The annual output volume of the company oscillated from SKK 120 to 150 million.

After privatization in 1992, Promet became a family firm when the Smolár family bought the enterprise from the Ore Mines. The enterprise evaluated at SKK 140 million was auctioned off for half that sum, and the owners were also granted a credit from IRB worth SKK 100 million. The administrator of bankruptcy assets, Mr. Milan Chovanec, raised the suggestion during the criminal proceedings that the authorities revise how Promet's business is run and how its result are measured.

Initially, Mr. Chovanec tried to keep up the production. He offered Promet for lease under the condition of preserving the existing jobs. Owing to a lack of interest, he abandoned this condition after a long wait. The enterprise property was acquired in an auction by Elka, whose 100-percent owner is the Sitno Holding, a. s., Kremnica. This company was founded on April 6, i. e. 10 days before the Promet was purchased. And one of Sitno Holding owners is reported to be the former minister of economy Mr. Ľudovít Černák. As he told the Pravda daily newspaper, the entrepreneurial sphere will be his domain for at least the next five years. His visions of a functioning holding company, with plans five to ten years in to the future, is based on three varied activities - metallurgy, information technologies and the tourism business.