East Point builds biggest grain terminal in Europe - about 35m EUR for completion of silo in Constanta

(Zoran Drakulić)

- Company East Point plans to increase the capacity of the silo in Constanta from 108,000 to 150,000 tons, for which between 32 and 35m EUR will be provided - Zoran Drakulić, the President of East Point told eKapija and pointed out that the company would soon finish the negotiations with the strategic partner for that investment.

- I am talking about East Point's additional capitalization worth about 40m EUR. Our partner will have the share of 50% in the future project. The documentation has already been made, we have obtained majority of licenses and the works on expansion of the existing silo are expected to start in late April or early May. It will be one of the biggest grain terminals in Europe, as well as in the world - Drakulić said in the interview he gave on the second day of the Business Forum on Kopaonik.

New silo in Constanta will be supplied with grain from all Danubian countries, Russia, Ukraine, as well as from the Black Sea's ports. The terminal is situated exactly in the location where navigable canal Danube - Black Sea ends.

- After its capacity is increased, the terminal will be receiving over 4m tons of cereals instead of current 2m tons, which is the annual quantity of cereals transported via Constanta. Our country will also benefit from the expansion of the silo and I expect Serbia to export between 5 and 6m tons of cereals per year, but that does not mean that the whole quantity will be transported via Constanta. Romania also has a big potential since it currently produces 18m tons of cereals and exports about 3 to 4m tons. It plans to increase production to 40m tons, and most of these cereals will be delivered to our silos - said Drakulić.

Let us remind that East Point invested 2.7m EUR in grain terminal near Romanian town of Đurđu in May 2009. That terminal will be the place for collecting crops from Romanian and Bulgarian fields and exporting them to the Mediterranean market. The capacity of the silo (if wheat is stored) amounts to 5,000 tons, but it can be easily increased to 12,000 tons. It is capable of keeping and processing all types of cereals, as well as sunflower and oilseed rape.

The announced expansion of capacities in Constanta and the existing silo in Romania will put East Point Holding on the top of the chain of the purchase of cereals in quite large Romanian-Bulgarian zone.

Acquisition of JRB to be discussed in autumn

When asked about plans for Yugoslav River Shipping (JRB), in the takeover of which he used to be interested, Drakulić replied that East Point was considering the model of acquisition and cooperation with potential partners because it had not given up that takeover.

- Consolidation of the fleet on the Danube is inevitable and only big companies can survive on that river. That is exactly what we wanted to do, but the moment was bad, because we were stopped by the global economic crisis. Due to turbulence in the market, the turnover dropped by over 40% in physical size and by over 50% in incomes. We registered big financial losses and we were not ready for acquisition. Since banks are now helping us, I expect that we will be again in the position to talk about takeover of JRB or some other fleet in six or seven months- said Drakulić. - We find the capacities of JRB more than needed. The projections say that we will have 8m tons of grain in our silos in 2012, which is nearly three times more than now - he added.

On February 3rd, 2010, the Privatization Agency terminated the contract for sale of Yugoslav River Shipping (JRB), which was bought by East Point in 2009 for 24.5m EUR, because the new owner did not pay the first installment after the extended deadline that expired on January 29th. As the Agency announced on that occasion, preparations for the new tender will start very soon. That institution will not start the negotiations with the second-ranked bidder (the consortium comprising CFNR from France, Dunavski lloyd from Sisak in Croatia and Bomex Export from Zrenjanin). According to the Agency's announcement, that consortium gave up the offer the moment it rejected to extend the validity of the auction guarantee.

East Point interested in fleet in Slovakia

Drakulić told eKapija that East Point Holding was interested in acquisition of certain fleet in Slovakia, which would be the investment worth 7 to 8m EUR.

- That fleet maybe suits us better than JRB's fleet because, unlike JRB, they do not have additional property and, in that case, we would buy only the pure capacities for transportation. The fleet includes 120 barges.

Modernization of baking industry Klas - up to 17m EUR for first phase

East Point has obtained the loan from the EBRD for modernization of the production units of baking industry Klas, which would increase its capacities, improve the efficiency and broaden the assortment of products.

- We planned to invest about 35m EUR, but we had some complications due to unresolved ownership relations for the location we bought. I hope that all disputes will be resolved within next 30 days and that we will then start realization of the investment. Between 15 and 17m EUR will be invested in the first phase, and the money is provided from the EBRD's loan. When it comes to Klas' retail chain, we plan to increase the number of facilities within next two or three years from 80 to 200 to expand to all cities in Serbia - said .

T.S.