Oleg BABAN: "Glass production requires timely investments"
The increase in production by 1.5 times and the expansion of the product line is the result of a major investment project of the Glass Container group of companies (which includes the Glass Container Company (GCC) and Glass Container Prim (GCP). The total cost of the project is 17 million euro, more than 80% of this amount have been spent in June 2019; the GCC plant launched a new furnace and two new glass packaging production lines.
The funds were provided by the European Bank for Reconstruction and Development (7.5 million euro) and the "Mobiasbanca" OTP Group through the European Investment Bank line of credit under the "Filiere du vin" program (5 million euro), as well as GCC's own funds.
Glass Container Company was registered in 1995 as a project to promote Moldovan wines to Western markets. Its shareholders were the Moldovan government with an investment of $40 million, MAIB, the Spanish company ELEUSIS and 15 wineries within the country. The plant was built in 1997 and produced its first products in August of the same year. The Western NIS Enterpise Fund acquired part of the stake in November 1997 from a Spanish investor and became the company's shareholder.
WNISEF is managed by Horizon Capital, it is the largest shareholder of GCC (40%) nowadays, Purcari Wineries bought 31% of the company’s shares from the state last year, Moldova Agroindbank owns 17% and 11% were distributed among small shareholders.
The first furnace was installed at the glass factory originally, which made it possible to produce dark glass products (for wines, beer, olive oil, etc.) However, there was market demand for white glass as well (packaging for juices, water, brandy, etc.). However, not all shareholders wanted and had the opportunity to make new investments for the construction of a second furnace, therefore, a second company was created in 2007. Glass Container Prim has two main shareholders which are WNISEF (81%) and MAIB (17%). This second plant opened in 2010. That is, the group has two plants and common major investors.
"Glass production requires constant monitoring and timely investments. We carried out a major overhaul of the furnace at the first plant (GCC) seven years after the launch in 2004, and also partially repaired it in 2012. All this time, we felt the growing demand for glass containers and the need to expand the color gamut, we needed a new furnace and diversification of our production taking into consideration the new technologies" says Oleg BABAN, the General Director of GCC and GCP.
The investment project for the construction of a new furnace and the launch of two out of three new lines (the third will be launched at the end of the year) started at the beginning of 2019 and was completed by June 2019. GCP plant didn’t produced any goods within six months but GCC reserves were prepared to cover the needs of customers within the market.
"Glass Container Company not only increases the production capacity after the reconstruction but it will be ready to offer its customers a new range of products which will contribute to the export of Moldovan wine products outside the country" , said Oleg Baban.
The GCC factory will reach full capacity by mid-2020 and produce 75 thousand tons of products per year which is 50% more than in 2019. In addition, it is planned to reduce the weight limit for some assortments using the latest technologies (NNPB). This is a huge financial advantage for the manufacturer and its customers; it also expands the ability to issue containers at the special requests of customers.
The export geography of GCC and GCP products covers 35 countries in Europe, Asia, North and South America and Africa. Both plants produce over 200 types of glass containers for more than 250 permanent customers.
The Glass Container group of companies is perhaps one of the few successful projects of foreign investors developing in Moldova for more than two decades. Moreover, economic and market conditions should have been conducive to this development but there were difficult situations for the group that not every company could find a way out of.
The group experienced four serious crises during its activity. The first crisis occurred in 1998 when plant was just starting to work. Then, the first embargo on the sale of Moldovan wine to Russia in 2006, the major export market for Moldovan winemakers at that time. After that the new global crisis of 2008-2009 took place, the launch of the second plant (GCP) was postponed for two years due to it. And finally, the "Crimean crisis" which became the most serious test for the group, as the regional currencies sharply devalued, Moldovan Leu as well, but not significantly.
The group’s financial director, Boris Crivoi recalls: "We lost the majority of customers in the East in one night which is about a third of all our customers. It was due to the fact that our currency became stronger and products became more expensive immediately. Also, we lost the Georgian market due to disruption of logistics through Ukraine"
Nevertheless, the group has survived and stays the course. It continues to develop and expand the diversification of its production. The company has 420 employees; the turnover amounted to $41.8 million in 2018. This company is one of the few positive development examples of large business in Moldova, based on foreign investments. //23.10.2019 - InfoMarket.