Ready to put most locations in Eastern Europe on his expansion list, like Serbia, Bulgaria, Moldova and Ukraine, and to develop a network of at least 100 stores in Russia, Enrico Perini, owner of Romstal says a time will come when they will be ready to take on the West.
"To be able to go West we need to have the volumes of the companies in the West. That would be about it in terms of philosophy. Let us get the volumes and experience first. After that there are markets like China, India and look at how big Africa is. If we have results in Russia in 5 or 6 years, we will then be able to think about expansion (...)" Perini explains.
In 2008, 14 years since its establishment, the Romstal group will post more than 500 million euro business, whilst it aims to reach one billion euros by 2010. According to the current estimates, Romstal will conduct a business worth 1.1 billion euros in 2010.
Perini intends to turn Romstal, the spearhead of the group by the same name, into an international player. The first steps have already been taken.
Last year, Romstal invested 3.5 million euros through Valrom in a production centre in Vinita, Ukraine, with the total investment set to reach 10 million euros. It also bought Doming, one of the leaders of sanitary ware and electrical equipment market in Serbia. The deal, worth 10 million euros, meant the Romanian company received a distribution network, which includes 10 centres, two in Belgrade and a 20-25% market share. Romstal expects sales to reach 30 million euros in Serbia this year, a figure that should reach 40 million euros by 2010.
Romstal first came to the attention of the market when Perini sold financial service company Romstal Leasing to Belgian investment fund KBC in a 70 million-euro deal. The acquisition of Romstal Leasing was an example of Romanian businesses developed to the point where they draw the attention of a major investment fund, willing to conduct such a deal.
Development on the domestic market, Perini says, will slow down in two or three years and then a period to improve efficiency of operations will follow.
"We'll expand in the next one or two years and then we will have to make the business as profitable as possible. Some sales points or warehouses will have to be relocated, either because it does not make any sense to keep them there or because they do not have the desired success," Perini said.
Such an example could be the 30 million-euro investment announced for Topoloveni, which is due for completion in 2009. "We may relocate this investment because we have found a better location," Perini added.
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