Enrico Perini, the chairman and majority shareholder in Romstal, a group of firms with annual turnover worth above 300m euros, says the best policy for the company is to ramp up its presence on the domestic market and in parallel develop operations on the markets in the region.
"The expansion process had to be started early, we had to enter neighbouring markets. The current size of the company does not allow us to really go global. I consider Romstal is a regional company, which in 2-3 years will get close to its expansion peak on the Romanian market," Perini told ZF.
Romstal operates on several market segments, from sanitary ware and installations to car leasing. Through Romstal and Valrom, the group is a major player on the domestic market of thermo-hydro-sanitary equipment distribution.
Three years ago, Romstal entered the market of Moldova and then expanded to Ukraine. By yearend, the Romanian-held company wants to develop operations in Bulgaria and Serbia, as well.
Of the 200m-euro turnover Romstal registered in 2006, 60m euros came from abroad. Perini expects turnover to reach 270m euros at the end of this year, of which 190m euros to come from the domestic market. The turnover derived abroad should therefore increase by 30% from 60 to 80m euros. Romstal's officials put the group's 2007 turnover at 430m euros, from 310m euros in 2006.
Early this year, Romstal group, through Valrom, opened its first production centre abroad, in Ukraine, entailing initial investments of 3,5m euros. Total investments are expected to reach 10m euros in the next years. While entrance on the markets of Moldova and Ukraine has as a target the Russian market, expansion in Bulgaria was particularly determined by the two states' EU integration.
Romstal's foreign development policy is based both on the possibility of its acquiring some local companies, and on start-ups. Now, Romstal network includes 157 outlets, of which 120 in Romania, 19 in Ukraine, 17 in the Republic of Moldova and one in Italy.
By yearend, the company plans to open, at a regional level, another 14 subsidiaries and 3 new warehouses, in Bucharest, Deva and Bacau, with total investments to revolve around 50m euros. The company invested 36m euros last year to develop warehousing capacities and expand the distribution networks of Romstal and Valrom.
The sudden growth the company Perini set up in 1994 has witnessed in recent years must be fuelled further by a strong capital inflow, he believes. "(...) Our strategy of being as transparent as possible financially has started to pay off". "More transparency can mean you can borrow more cheaply. This is what some less transparent Romanian firms do not understand. Foreign companies grabbed the top spots on most markets because of their high level of transparency," Romstal group's chairman said.
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