Ivan Vujičić, CEO of Sto Posto - Dutch Nutreco interested in takeover of our premix factory

It already becomes a tradition that web portal eKapija grants Aurea awards to the top investors of the year. This year`s awards ceremony will take place at the end of March. Since the new cycle is approaching, we paid a visit to the companies that were shortlisted for last year`s award to check what state of business development they reached.

Company Sto Posto, which was the first to build the factory for production of vitamin mineral premixes for fodder production in Serbia in 2008, spent most of the last year negotiating with numerous foreign companies that are interested either in the takeover of the factory of vitamin mineral premixes or the partnership with the Serbian manufacturer. The premix factory in Velika Plana, in which about 5m EUR was invested, was visited by the representatives of companies Vitfoss (Denmark), Nutreco (Netherlands), Alltech (USA) and Biomin (Austria), while the best results are achieved in the negotiations with Nutreco.

As Ivan Vujičić from Sto Posto told eKapija, the concrete form of partnership with Nutreco should be defined prior to end of January.

Ekapija: What forms of cooperation have you discussed with Nutreco and other foreign companies?

The companies with which we have negotiated the most find it appropriate to buy the factory of vitamin mineral premixes, which is the best proof of our high standards and top quality of products. We are interested in becoming partners with one of these multinational companies, and Nutreco is one of the largest and most powerful companies in agricultural industry. We will know by the end of the month if we are going to sell the whole factory or enter some form of partnership. In any case, Nutreco's participation in production of vitamin mineral premixes will be intensified in the future. If we are satisfied with the cooperation, we will also talk about other segments of our business.

Ekapija: What will partnership with Nutreco bring to premix factory Sto Posto?

Cooperation with Nutreco would strategically position Sto Posto's operations on long-term basis. We would get a partner and optimize all segments of business and production of vitamin mineral premixes. First of all, I have in mind the system of procurement of high-quality raw materials at accessible prices that would guarantee excellent ready-made product. That would create conditions for the growth of sales in domestic market and market development in surrounding countries.

Ekapija: In addition to premix production, Nutreco and Sto Posto also have other common fields of interest. Did you talk about partnership in production of fodder?

We have three pillars of business - fodder production, production of vitamin mineral premixes and pig farm. Nutreco covers all these segments through its companies. The annual turnover of that Dutch company amounts to 5 billion EUR and the company has big plans for expansion. For example, they are in the process of acquisition of factories in Portugal and Spain from company Cargill. It can be expected that Nutreco starts operating in Serbia one day through business or ownership relations with Sto Posto, and that also depends on the results of production and sales of vitamin mineral premixes. Nutreco expressed the interest in Sto Posto the first time when it analysed our capacities for export of products to Russian market, and then we saw the possibility for broader cooperation in field of premix production.

eKapija: Nutreco has premix factories in surrounding countries. Does Sto Posto plan to export its products to these markets?

Our plan is to produce the goods primarily for the needs of Serbian market and the markets of former Yugoslav republics. Since it is common that surplus demand in the countries of southeast Europe in certain periods of the year can not be simply satisfied from local production, Serbian capacities would be used for export to these countries in that case.

eKapija: Do you plan to hire new workers in the premix factory?

There are six workers in the factory in Velika Plana at the moment. I must point out that all foreign companies were satisfied with the competence of our staff and, regardless of the new ownership structure, we will keep the existing personnel and hire new people in case of production growth. We will increase the number of people in the sales department, who will also be providing the post-sales services and, thus, improve the quality of our overall service.

eKapija: When you opened the premix factory in late 2008, you were producing the goods for internal needs of factory Sto Posto, but you also announced commencement of production for external market. Are you satisfied with the sales in 2009?

We were selling between 100 and 150 tons of vitamin mineral premixes per month in 2009, which is much below the factory's capacity, but, just like I said, we were focused on the negotiations with foreign partners. We've reached our goal, but it is below the factory's annual production capacity of 25,000 tons. And we also have enough space to double that capacity. There is no factory in Serbia similar to ours and the market potential is huge. With the resources we have and the system of procurement of raw materials, we will definitely be more competitive in the following period, even outside Serbia.

eKapija: How did the farms that used your premixes react?

The farms that used Sto Posto's premixes achieved excellent results. We conducted research on several farms and compare their previous results with the results they achieved when they were using our premixes. The results were up to 20% better.

eKapija: What is the potential of production of vitamin mineral premixes in Serbian market?

It is big if we have in mind how much fodder is produced in Serbia on annual basis and what food safety implies. On the other hand, through development of cattle growing, Serbia should produce at least twice as much fodder as it produces now, which would represent the growth from 3,250,000 to 6,500,000 tons. That is why Serbian fodder market is very interesting to multinational companies whose knowledge and technology, the systems of procurement of raw materials and other resources can bring certain quality to Serbian agriculture. Procurement of raw materials is expensive due to high margins of distributors. I expect that to change with the arrival of big companies that produce food for animals, which will surely affect the end-users, that is, buyers and consumers of meat and meat products, milk, egss and other food products.

eKapija: Sto Posto is the leading fodder manufacturer in Serbia. Will partnership with Nutreco help you increase your market share?

Sto Posto, as the leading fodder manufacturer in Serbia, covers about 3% of the market, while other big factories have the market share of about 10%. We can produce 350,000 tons of fodder per year, but we would need to find some bigger systems to buy our goods. Serbian market does not have large number of buyers who can pay for large quantity of fodder, the infrastructure to store that fodder or enough cattle to feed. The buyers are, mainly, individual manufacturers and small farms that buy food in the bags of 10 to 20 kg. We produce about 100,000 tons of fodder per year. That is why one of our strategic goals is to expand the capacity when it comes to packaging. We plan to provide the funds for investments in packaging from our own sources, while the coperation with Nutreco or sale of the factory are exclusively related to the segment of production of vitamin mineral premixes, at least for now.

eKapija: Do you export your products to neighboring markets?

Yes, to Bosnia and Herzegovina, Macedonia and Montenegro. We also plan to open distribution centers in other countries of the region.