Industry Insights - spring 2014

IN Industry Insights

SPRING 2014

MOVING FAST ON THE

INFORMATION HIGHWAY

Prysmian Group

THERE'S NO ROOM

FOR ERROR

RAMIRA SA

FOCUS ON SUSTAINABILITY AND OUTSTANDING SERVICES

Jan Veskrna,CEZ Group Romania

what are

cigarettes made of?

British American Tobacco

3

f you are already here, reading these words, I do hope that you've accepted our invitation to take the first step towards what we aim to be the beginning of a fruitful friendship: the first issue of the Industry Insights magazine.

When we've started this venture, we knew that Romanian industry has been painted in black for years now. And we didn't set ourselves to wash its image, but rather to be a mirror that does not distort the reality.Inside the magazine, you'll find a wide coverage of the Romania’s industrial landscape, meaningful information from various industrial sectors – oil and gas, energy, chemicals, food & drinks, pharmaceutical, metallurgy, constructions, IT&C and electronics, machinery – as well as exclusive interviews with top managers, success stories, new ideas and business opportunities. In a nutshell, this aims to be a real tool for finding new, reliable partners, a link between suppliers, manufacturers, customers and interesting people.By reading this particular issue, you'll find that many companies succeeded by betting not on a lower price on the market, but on quality products, outstanding craftsmanship and an ultra-specialized production. A strategy that might just work.

DAN EBERHATeditor in [email protected]

THE BEGINNING of a Fruitful Friendship

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INDUSTRY INSIGHTS / SPRING 2014 / EDITOR'S NOTE

4

6 Highlights Relevant news from different industrial sectors

COVER STORY

8 Cez Romania A Focus On Sustainability and Outstanding Services

COMPANIES

15 RAMIRA SA No Room for Error

20 UMEB Maximum Efficiency

in Extreme Conditions

24 Menatwork Personnel Training Is the Key for Development

26 Greenbau Tehnologie 10 Years of Achievements

28 British American Tobacco What Are Cigarettes Made Of

34 Altius Fotovoltaic Solar Energy Can Be Attractive for Households and Investors Alike

37 Duraziv Complete Solutions for Construction Finishing Works

42 Prysmian Moving Fast on the Information Highway

CONTENTS

I am mostly proud to find that our specialists in wind and hydro systems are acknowledged for their skills and dedication.Jan Veskrna, CEO – CEZ Romania

8CEZ ROMANIA

48UZTEL SA

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INDUSTRY INSIGHTS / SPRING 2014

48 UZTEL SA Solutions for Customers' Problems

52 Kastamonu Romania An Open Door to Quality and Diversity

54 Casa Panciu Healthy Food and Quality Wines

BUSINESS ENVIRONMENT

58 CCI Prahova An Elite Club of the Business Community

The factory plays an important role within the European and Global network of BAT.Chris Gemmell, Operations Director – British American Tobacco

28BAT

42PRYSMIAN

54CASA PANCIU

34ALTIUS FOTOVOLTAIC

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INDUSTRY INSIGHTS / SPRING 2014 / HIGHLIGHTS

RECORD NET PROFIT FOR OMV PETROMOMV Petrom reports a record net profit of 4.82 billion lei (over one billion euros) for the full year 2013, 22% higher compared to 2012. According to the report submitted by the company to Bucharest Stock Exchange, this result was achieved despite lower sales (company's turnover in 2013 was 24.18 billion lei, lower by 8% compared to the previous year).

“Despite the lower demand for gas and electricity, the contraction of the refining margins and the electricity price level, Petrom recorded a solid financial performance due to operational excellence, and a strict control of cost structure, and due to favourable price of the crude oil,” said Mariana Gheorghe, CEO of OMV Petrom S.A.

Ford to halt Romanian B-Max production in March and April

It seems that Ford hasn't exactly hit the right spot with the B-Max model. According to Reuters, Ford Motor Co. was forced to halt production at its Romanian car factory for four days in February because of low demand, and it will stop it again, five days in March and three in April.

Ford took over struggling local carmaker Automobile Craiova in 2008 and started producing its B-Max model there four years later. The company made over 68,000 cars and 250,000 engines in Romania last year, but since September it has paused production for several days each month. Ford Romania employs about 4,000 people.According to German media, there are rumours that Ford intend to partially relocate the production of the Fiesta model from Germany to Romania.

LUKOIL TO BUILD A PHOTOVOLTAIC PARK IN ROMANIA

LUKOIL Energy & Gas Romania, part of the Russian oil group Lukoil, will build a photovoltaic park with a capacity of 9 MW near Petrotel refinery in Ploiesti, Romania, MEDIAFAX reports citing sources in the market.Since the installation of 1 MW of photovoltaic energy requires an investment of 1.5 million euros, the value of the Lukoil project is estimated at about 13.5 million.

DONCAFE PRODUCER AQUIRES AMIGO FOR $ 20 MILLIONStrauss Coffee, producer of Doncafe line, buys Amigo soluble coffee brand for $ 20 million, from the Brazilian company Cia Iguacu de Cafe Soluvel, announced the Israeli company.Amigo soluble coffee is marketed

(and well known) in Romania since 1983, and recorded sales of $ 12.5 million and a market share of 1.8% in volume. The brand subsequently entered other markets in the region.Panfoods Co.. UK Ltd, which manages

international sales for Cia Iguacu Coffee Café Soluvel, is the exclusive importer of Amigo brand in Romania. The coffee produced by Brazilian group is packed by Panfoods in Romania, at its plant from Vacaresti, Dâmbovita County.

Foto: Petrom

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ROMTHERMInternational exhibition of equipment and installations for heating, cooling and air conditioning systemsRomexpo will organize, between 10th and 13th of April 2014, the only trade fair in Romania dedicated to cooling and heating equipment – ROMTHERM.This is the 19th edition of ROMTHERM fair, and you can find here heating, air conditioning fixtures and systems, etc.For more details, visit: www.romtherm.ro

CONSTRUCT EXPOInternational Exhibition of technology, equipment and machinery for construction industry, and building materials.New products, new ideas, new services, new businesses. These are the four parts of the Construct Expo 2014 trade fair, the largest dedicated to construction sector in Romania, being a real trendsetter in this field. To see what's hot in the field, visit ROMEXPO between 10th and 13th of April.For more details, visit: www.constructexpo.ro

Romania: industrial production grew by 7.8%, in 2013

In Romania, industrial production increased last year, compared to 2012 , by 7.8%, as gross series and by 7.1% as series adjusted by number of working days and seasonality, announced Wednesday the National Institute of Statistics (INS).The development was supported by manufacturing, which rose by 9.2% as gross series and mining and quarrying (2.2%). Production and supply of electricity, gas, steam and air conditioning fell 1.4%.

“Big industrial sections have registered increases in most categories of goods: capital goods industry (+11.5%), durable goods industry (+10.4%), intermediate goods industry (+8.7%) and consumer goods industry (+ 5.9%). Energy industry decreased by 1.4%,” it said in a statement of the National Statistics Institute (INS).

NOKIA SELLS ROMANIAN BRANCH FOR NEARLY EUR 18.8 MILLION

Nokia Corporation sold its Romanian unit to Nokia Finland Oy for EUR 18.84 million, part of the process of selling the Finnish group’s mobile phone business to technology giant Microsoft.

“This change is part of the preparation of our business division D&S (Devices & Services) for the transition to Microsoft. We will continue our activity in Romania,” Nokia representatives told Mediafax.In November 2013, Nokia shareholders approved the sale of the mobile phone division of the company to Microsoft for a total value of EUR 5.44 billion, being unable to compete at the same level with market leaders such as Apple and Samsung.

FAIRS & EXHIBITIONS

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INDUSTRY INSIGHTS / SPRING 2014 / COVER STORY

A FOCUS ON SUSTAINABILITY AND OUTSTANDINGSERVICESMr. Jan Veskrna, Country Manager CEZ Group in Romania, CEO of CEZ Romania and President of the Management Board in CEZ Romania and CEZ Distributie, talks about electricity production, transmission, sustainability, investments in renewable energy, about social responsibility and company's support for educational and cultural projects and events.

II CEZ Group entered the Romanian market in 2005, when it purchased

Electrica Oltenia. What were the reasons behind the decision of the Czech Group to acquire those shares, what were your objectives, what difficulties did you meet and to what respect were the initial objectives achieved?

JV In 2004, the Romanian Government has decided to privatize electricity

distribution and supply companies, with the aim to secure the more than necessary investments into electricity networks.CEZ, with its long tradition and very good performance into electricity transmission systems, has then decided, based on the sound regulatory framework in Romania (distribution tariff methodology), to bid for 51% of Electrica Oltenia, the biggest energy distribution company in Romania, with its approximately 1,4 million customers.

The main objective after taking-over was to improve services towards customers, while increasing the efficiency, defining and optimizing processes, and always playing according to the legislation in force; we have heavily invested into the electricity grid (2,5 times more than Electrica Oltenia previously had).Fortunately, we have found many specialists within Electrica Oltenia and we were also inspired to attract others from the market, that represent an important asset for CEZ.CEZ was the very first company to implement unbundling in the Romanian electricity market, and as a result Electrica Oltenia has been divided into CEZ Distributie (CEZ Distribution) and CEZ Vânzare (CEZ Sales), each with its own specific activity.Every year, the targets set by the management were addressed with seriousness and have been reached. After 8 years of heavy investments, our network has been refurbished, almost 20%

CEZ ROMANIA

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of it being updated with cutting-edge technologies. As a result, the distribution service improved a lot. Operational achievements were reflected into financial results.I am proud to conclude that CEZ Distributie and CEZ Vânzare are now modern, fully restructured companies which provide quality services to customers, playing an important role in the Romanian electricity market.

Let’s move fast-forward to 2012, when CEZ Romania ended the year by reaching record

EBITDA (719 mil lei) and profit (189 mil lei). Is the ascending trend valid for 2013 as well?2012 was indeed a very good year. Among the highlights of our achievements, we count the collection of the debt from CFR, the completion of construction of the Wind Farm in Dobrogea, and the beginning of the refurbishment of the four micro hydro power plants in Caras Severin County. In 2013, on the other hand, we were put under higher pressure, being affected by

“I am mostly proud to find that our specialists in wind and hydro systems are acknowledged for their skills and dedication.”Jan Veskrna

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changes in legislation regarding the number of Green Certificates (GC) offered as subvention per MWh, changes in the price of GC on the market, new taxes on distribution activity, etc. CFR and the Romanian Post significantly increased the debts towards us. The temporary accreditation of operation for Fântânele Vest wind power plant has expired in October, and the final accreditation was put on hold by the European Commission, and as a result we haven't received any GC in November and December for this power plant. However, there were also positives in 2013: besides the continuous improvements that we are focusing on, we successfully finalized the refurbishment of Resita hydro power plants, and we obtained both the update of the license for production and the accreditation for the GC scheme. The figures for 2013 are not yet audited and therefore I cannot comment them.

What are your expectations for teh year 2014?

In 2014, we are preparing ourselves for new challenges, mostly coming from the complete liberalization of the market for business customers, new taxes on special constructions that will have a significant impact over cost structure, and new regulations for energy distribution and supply services, which will be in force starting with this year.

At the end of 2012 you were supplying energy to 3,807 consumers. How did

that number evolve in 2013?

The number you mentioned for 2012 refers to eligible customers. In 2013, the number of eligible customers has grown to 13,148. However, the figures are not comparable as the increase is the direct result of the deregulation calendar.

What is the ratio between industrial and domestic consumers in number and

power supplied/consumed?In 2013, the household customers represented about 45% out of the total consumption and 94% out of the total customer number, while business customers consumed 55% out of the total energy and represented 6% out of the total number of clients.

How do you fight against illegal connections to the grid?

Illegal connections to CEZ distribution grid in Romania are a reality that generates financial losses, also causing a great discomfort to other well-intended consumers, who pay their invoices in due time and are entitled to high quality services.Despite the fact that the current law clearly stipulates that theft of electricity through illegal connections represents a crime, thousands of such cases are annually identified and submitted to the criminal investigation bodies.The concrete measures taken to counteract the illegal connections included both “technical” prevention actions, aimed at eliminating the possibilities for energy theft, and informing the customers about the risks they are exposed to by illegal connection, as

CEZ wind farm

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well as actions for identifying and stopping fraudulent consumption.Among the preventive, technical measures, I would like to mention some of our important projects, materialized in investments in the medium and low voltage grids:

Modernization of the low voltage grid, using only insulated twisted wires and underground electrical cables;Modernization of electrical connections, using metering niches and implementation of secured electrical connections by mounting metering groups within property limit;Relocation of meters from apartments to the property limit;Distribution of electricity closer to the medium voltage grid, by reduction to the minimum of the low voltage grid;Resealing, securing metering groups and mounting protection elements to all household customers and economic agents, a project that started a year ago and will be finalized by mid 2014;

Among the actions to identify fraudulent consumption I’d mention one project, currently in the final phase of implementation – obtaining area and local energy balances, a tool that allows us to identify quite quickly the areas with the highest losses and implicitly with the most illegal connections. Also, from the beginning of 2013, we have installed the first integrated smart metering systems – AMM (Automated Meter Management) type – to household customers and economic agents, an action that will continue in the upcoming period until reaching 80% of total customers. The AMM metering systems offer, among other facilities, rapid diagnosis of energy consumption, losses on a grid segment, as well as possible unauthorized interventions on the metering group. The customers with unsubstantial variations in consumptions, or with unreasonably small consumptions in relation to the installed power, are identified automatically in the SAP system, a system implemented since 2007.There is a specialized department within the CEZ Group dedicated to identifying energy fraud. Our team, in many cases accompanied by gendarmes and Police officers, permanently try to identify those who chose to be on the wrong side of the law, which are further investigated by the criminal investigation

bodies. In several cases, sentences to jail were issued. It is a fact that these thefts, besides the losses they cause to the electricity transmission operators, also have a negative impact over the quality of the electricity distributed to the other customers, causing interruptions, fluctuations, damaged receivers, voltage under the admitted limits, and shock hazard.I'd like to stress the fact that solving the problem of illegal connections to our energy distribution grid was and remains a priority for us, because we are committed to our goal to offer the best possible services to our customers.

What steps have you taken to streamline the company's activity and

what was the result?Our primary focus at the moment is to consolidate and optimize the performance of our current portfolio and to deliver outstanding services for our clients. We are using CEZ Group's internal synergies to increase efficiency of our core processes and to optimize our costs and CAPEX structure, while continuing to apply the best practices in the industry.Expansion through new acquisitions is no longer an operational target for us, given the current situation on the market. We will remain focused on answering our clients' various needs. This is why we continuously monitor market dynamics and opportunities. And, in this respect, we foresee future projects with higher energy efficiency and an enhanced cooperation with our key customers.

CEZ Romania has consistently invested in renewable energy – the construction

of the wind farm in Dobrogea and the refurbishment of the hydro power system in Caraș Severin being two major projects. Can you give us more details about these investments?In August 2008, CEZ aquired the two projects that represent the largest onshore wind park in Europe: one in Fantanele and the other one in Cogealac-Gradina, with a total capacity of 600 MW. The total investment of CEZ Group reached 1,1 billion Euro. The work on site started in October 2008, and the first MWh was produced in June 2010. For the Cogealac site, the construction works were completed in 2012, and the park became fully operational by the end of the same year.Fântânele, Cogealac and Gradina are located in Dobrogea, in the northern part of

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Constanta County, at a 17 km distance from the Black Sea. CEZ Wind Farms comprise of 240 turbines of 2,5 MW capacity, each of them being 100 meters high, and 50 meters propeller blades. Since the beginning of the operational phase, CEZ Wind Farms has significantly contributed to the level of energy consumption coming from renewable sources in Romania, and the compulsory quotas of Green Certificates.Through this investment, CEZ Group has become one of the most important investors in the Romanian energy field, producing renewable energy that do not consume Romanian natural conventional resources.

RESITA PROJECTThe micro hydro power plants nedeed upgrades because of the high degree of physical and moral usage of the original equipment, and because of the potential risk of negative impact on the environment. The refurbishment targeted eight major sectors: CHE Grebla, CHE Crainicel I, CHE Crainicel II, CHE Breazova, Adduction channels, Timis Trei Ape pump station, 6/35/110 kV Grebla and aerial electrical line 35 kV power stations, the latter being the Connection to 110kV distribution network.The actual work began in July 2012, after getting the necessary permits, starting by disassembling of the old equipement. Throughout the refurbishment project, hydropower production was stopped. During the rehabilitation of the hydropower, the TMK Hydroenergy Power team conducted the maintenance and modernization work and system upgrades.The new equipment installed in the 4 micro hydro power plants (Grebla, Crainicel I, Crainicel II and Breazova) meets high performance criteria, and includes new turbines, generator sets and GIS module transformers, electric cells and automation boards, automated equipment for cleaning the water, all of which were produced by experienced companies in Germany, Italy and Norway. Following the commissioning of new equipment, total installed power in the 4 hydro power plants increased from 18 to 22MW, efficiency increased by about 20% and, equally important, we have also increased the level of environmental protection.

But CEZ's presence in the two regions, Dobrogea and Caras Severin meant more than technical progress and investments. We acted like good neighbour of the local communities, bringing economic growth and investing more than 3 million euros so far in healthcare, education, culture and infrastructure. In Caras Severin, for instance, the general contractor of the work collaborated with Romanian companies throughout the project, supporting the development of the local economic environment. Also, one of the major advantages of refurbishment for the community is the direct connection to the National Energy System for Brebu Nou and Garâna villages, and a back-up power line for the area Valiug-Semenic Mountain.

Which is the value of these investments and the estimated time for

depreciation? For the Wind Farm, the expected term of amortization of the investment, according to the accounting, is about 21 years.In the Resita project, we have invested over 30 million euros in refurbishment, on top of the acquisition cost of the old hydro system. The expected term of amortization of this investment is about 17 years.

Recently, CEZ has been involved in the photo exhibition organized in the honour

of the Czech architect Karel Liman, who was the most appreciated architect of the Royal House in Romania. Is it a singular project, or you do have a larger program of cultural initiatives?

Grebla hydro power plant

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Social Responsability“We wanted to do more for the local communities, and our presence in Caras Severin County meant that we put our energy at work in many directions.”

CEZ initiated an International Poetry Festival which progressed along with the company, we have provided high end equipment to several medical wards from Caras Severin County Hospital, modern teaching materials to schools, and we have sponsored various cultural and sports events in the county.The Dobrogea region has benefited not only from the high amount of respected subcontractors and their teams which got new assignments, but also by consistent and sustainable long term projects targeting education, environmental protection, infrastructure and culture, with a positive impact over locals lifestyle.CEZ Romania has been involved in various CSR programs since 2009, and many infrastructure projects are already finalized. Among them:

Every year, CEZ has been a reliable partner, supporting local cultural and educational events and programs. For instance, the company sponsored every year a summer camp for the eminent students from Fântânele, Cogealac and Gradina.CEZ also initiated Eco Champions, an educational program implemented with the help from Mai Mult Verde association, which involved schools of Fântânele and Cogealac; within this program, ten volunteer clubs were established, in ten schools and high schools from Constanta County. Children involved in these clubs took part in debates and seminars with environmental topics, they promoted volunteer culture and were involved in eco activities. Plus, we have offerd jobs on Wind Farm site for the locals, taxes paid to the local and central public authorities, indirect economic support for the region, which benefited from the accommodation of more than 400 employees coming from all over the country.

The exposition dedicated to Karel Zdenek Liman was, indeed, a highly successful project, bringing into the public’s eye more than 30 years of work of this appreciated Czech architect for the Romanian Royal House, with significant contribution to Romania's heritage. We are honored to be among the initiators and supporters of this project, especially since it is a travelling exhibition, which is shown at Peles Castle, Cotroceni Palace, and several other places.As mentioned before, for years now, we are deeply involved in the community’s everyday life. We spread our efforts in three strategic directions: healthcare, education and infrastructure, while keeping a close touch with the cultural dynamics. We have either initiated or supported a series of cultural happenings such as the three editions of the International Poetry Festival in Caras Severin (CEZ is the only commercial partner of this festival attended by poets from around the world, more than 15 countries being represented by their most talented writers), we have financially supported documentation efforts and editorial costs for a book about most prominent public figures in Oltenia, as well as several projects with the aim of making a link between the Czech and Romanian cultural destinies, such as the Czech Book collection published by Curtea Veche Publishing, and the International Documentary Film Festival dedicated to the Human Rights. In all our projects, we associate our efforts to those of reputed public institutions such as the Ministry of Culture, the Czech Embassy in Romania or the Romanian Royal House.

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In 1997, RAMIRA was on the verge of bankruptcy certificate because of the Government's economic policy. In 2000, when

Izoterom Group acquired controlling shares of RAMIRA SA from FPS (State Property Found), the company passed through the process of reorganization. At that time, more than half of the equipment and machine tools were sold at price of scrap metal. Once a company with 2,000 employees, producing unique

machine tools for special projects, RAMIRA was facing banckrupcy at the beginning of the new millenium, with about 100 employees and debts of more than $ 2 million.After privatization, the company has entered into a process of restructuring, investments were made and next-generation machine-tools were aquired. RAMIRA already lost its customers for prototype machine-tools, and changed its field of activity.

NO ROOM FOR ERRORRAMIRA SA manufactures in Baia Mare welded fixtures for welding and assembly lines in automotive industry.

RAMIRA SA

Thus, the company started to manufacture and supply welded fixtures for car body assembly lines for the automotive industry, especially equipment. RAMIRA delivers products directly to Nissan, Peugeot, Renault, and Dacia, and as a subcontractor for manufacturers such as Kuka GmbH (final customers being BMW, Volvo, Volkswagen, and Airbus), Comau (suplier for Renault, Fiat, Ford, Land Rover, Mercedes), TMS GmbH

INDUSTRY INSIGHTS / SPRING 2014 / COMPANIES

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(Ford Craiova, Daimler, Opel), EDAG FFT (BMW, Mercedes, Opel, Ford). "We were the first Romanian company which has provided equipment for the assembly line of the first version of Logan, in Pitesti," says Mr. Dumitru Matei, former Chief Executive Officer and owner of RAMIRA.Since 2013, the majority shareholder of RAMIRA S.A. is the Czech company, leading European manufacturer of welding and assembly lines for the automotive industry. "RAMIRA is the first European company that received an order from one of Nissan’s factories; we produced and delivered all fixtures for the welding sections of the assembly lines of the Nissan factory in Slovenia, and had no complaint regarding the quality of our products," adds Mr. Karl-Josef Heinrich, current CEO of RAMIRA.Mr. Heinrich is a German citizen, but he was born in Romania and is proud that he has now the

opportunity to contribute to the development of RAMIRA. He joined RAMIRA at the end of 2012, just before the company was taken over by Chropynska. Both Chropynska’s management and Mr. Dumitru Matei lured him with the CEO position. His personal connections, as well as the expertise he has accumulated working over 25 years in the industry, helped Mr. Heinrich to open doors that RAMIRA could hardly access in the past.

"We are proud to be part of Chropynska group, which owns three factories, one in the Czech Republic, one in Romania and one in Slovakia, with a total of over 1,000 employees," says Mr. Heinrich.

"In the fall of 2013, Chropynska was designated as one of the best suppliers of Volkswagen factories, from a group of 250 partners of the German car manufacturer. And RAMIRA, as part of the Chropynska Group, has received praise from those present at the event."

In the period 2010-2013, RAMIRA

benefited from a refurbishment program worth

6million euro

50% financed from European funds.

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In the period 2010-2013, RAMIRA benefited from a retooling and upgrading program worth over 6 million euros, 50% financed from European funds. RAMIRA purchased 3D measuring devices and next-generation CNC machines, which can measure parts as large as 6 meters long by 2 meters wide, required for welding

sections of car body assembly lines. "On such an assembly line being manufactured over 100 cars per hour, there is no margin for error; if the tools would not be set to the nearest tenth of a millimeter, the left side of the car would not align with the right side, or doors would not close..." says Mr. Heinrich.

"Sometimes we have in production

ten thousand items at once, all unique, and all needed to be tracked and measured. Therefore, we introduced a new surveillance system for production, ERP, based barcodes, to increase efficiency. A unique item is 2-3 times more expensive than one which is mass produced, but also requires as much more attention".

Equipment for Peugeot-Citroën

assembly line

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Payback plan for the 6 million euros investment implies a three-fold increase of the turnover by 2018, from 10 to 30 million euros, and increasing the number of employees at 450. Plan that seems perfectly feasible thanks to increased production capacity, the ability to deliver parts of assembly lines for the automotive industry to the highest quality standards, the support provided by the parent company Chropynska, and the management performance. Moreover, a first step has been done - RAMIRA is about to conclude new contracts directly with top European automobile manufacturers such as Audi, and has all prerequisites to be the main integrator of manufacturing lines for Dacia and Ford in Romania.

A unique item is 2-3 times more expensive than one which is mass produced.Karl - Joseph Heinrich, Ramira S.A.

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Fonded in 1948 in an area which, at that time, was at the outskirts of Bucharest, UMEB was, as a result

of urban development, caught in the middle of the city, close to the current Afi Cotroceni mall, thus the property becoming a target for real estate developers. Fortunately, the majority shareholder of the company - U.S. investment fund New Century Holdings (NCH), which acquired the majority of shares of UMEB in 2004 - took a wise decision: sold the

Uzina de Masini Electrice Bucuresti (Bucharest Electrical Machine Works - UMEB) is the leading Romanian producer of electric motors for special purposes, excelling in such areas as explosion-proof motors and electric engines for urban vehicles. UMEB also manufactures various types of generator sets, including those for companies operating in civil and industrial engineering.

of a major customer, which opened its own factory. This coincided with a general decline in orders from the European markets, and a lower number of maintenance contracts." UMEB reacted immediately: several new contracts of lower value were inked, which, combined, not only compensated for the drop in revenue registered in 2009, but also led to a steady growth eversince. "We managed to double the turnover generated by product sold on the Romanian market in 2012 versus 2009, while keeping the number of employees constant – about 260”, says Mr. Gomoescu. This was possible due to the significant investments made in Romania by Petrom, in the oil industry - UMEB being the only Romanian manufacturer of certified explosion-proof motors for the petrochemical industry. Safety regulations require the use of explosion-proof motors by the petrochemical industry. "We are not only the main supplier of Petrom, but also an important supplier for all companies operating in the field of oil and gas extraction in Romania, an area less affected by the financial crisis," Mr. Gomoescu

MAXIMUM EFFICIENCY IN EXTREME CONDITIONS

UMEB

land, but kept the company running, and invested over 10 million euros in relocation and new equipment. And the results of this investment were immediate: after a fall in turnover in 2009, UMEB’s revenue increased year by year, reaching 8 million euros in 2012, and the upward trend continues in 2013."The significant drop in revenue in early 2009 was not necessarily due to the financial crisis," says Mr. Dan Gomoescu, sales manager of UMEB, "it was primarily caused by the loss

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adds. Thus, UMEB was able to not only survive in a branch of the economy – industry - which, in Romania, collapsed year after year, but also to grow its business when other traditional partners, such as Aversa, closed down or significantly reduced their activity.

How did UMEB become the preferred partner of many major players in the petrochemical industry? "Through a combination of factors: not only do we have very competitive prices, among the best in Europe, but we can also meet very tight delivery deadlines and quickly adapt to the customer's requirements, being able and willing to modify the specifications of an electrical motor even for very small orders," explains Mr. Gomoescu.UMEB has specialized in special projects, manufactured in small series, being the only Romanian supplier of electric motors for the nuclear power plant in Cernavoda, and also the sole producer of electric engines for the entire range of vehicles for urban public transport - buses, trams, trolley buses, underground trains. The market for electric engines for urban vehicles steadily declined in Romania, as the result of the City Council’s decision to import the vehicles for public transportation; on the contrary, the market for explosion-proof electric motors has expanded in the same period.Given that a large part of UMEB’s

production is exported (over 40%), the company is facing strong competition from other European manufacturers of explosion-proof certified motors. For general purpose motors, in addition to European manufacturers, there is a fierce competition from Asian manufacturers, especially those from China and Taiwan, which put a lot of pressure on the European market offering motors at very low prices.

"One of the great advantages of UMEB is that, even before this competition from Chinese companies, the Romanian manufacturer wasn’t focused on the production of general purpose electric motors, but had developed a wide range of special projects, produced in low volumes" says Mr. Gomoescu. Electric motors for special purposes, involving investment and experience in design, research and development, are UMEB’s bet for the future because, in the case of these products with high added value, competition does not necessarily mean a lower price, but, first and foremost, compliance

"FOR US, THE MOST IMPORTANT RANGE OF PRODUCTS REMAINS THAT OF EXPLOSION-PROOF MOTORS." Dan Gomoescu, Sales Manager–UMEB

with high standards of quality, efficiency and safety. And, in the case of special motors, designed for an environment with high risk of explosion, beneficiaries tend to retain their supplier, in this particular field the confidence in the manufacturers’ brand and even in the brand of the country of origin playing an important role for selecting suppliers.

To attract new customers, UMEB tripled the funds for presence with its own stand at the international fairs, participating in over ten exhibitions annually, on all continents. While in recent years UMEB, as well as other Romanian manufacturers, has been geared almost exclusively towards Western European partners, the potential represented by the countries from the former Soviet space, where the petrochemical industry is highly developed, is not exploited enough; to penetrate these markets, UMEB began to cooperate with Russian-speaking, well-connected sales agent located in those countries. UMEB also has exclusive dealerships in most European countries.

Explosion-proof motor

Generator set

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In 2014, Menatwork celebrates twenty years of activity in the production of building materials industry. The development of the Menatwork Romania, which was founded by the shareholders of the Italian company with the same name, is closely linked to developments in the career of Mrs. Viorica Grafu, the very first employee of the company and its current General Manager. We have interviewed Mrs. Grafu to find out the secrets of their success.

II Menatwork was established in the ‘80s in Italy, but the country where

the business had a real boom was Romania. What is the explanation?

VG Indeed, the company was established in Italy, and still exists there, but the

growth potential was limited in the country of origin, as it was in all developed countries. In Romania, however, as in all the other countries of the former Communist bloc, which "benefitted" from the overvaluation of real estate properties, the growth potential was much higher.

Coincidence or not, about the same time the company was established, the song

Business as Usual by Men at Work took the music charts by storm. What does business as usual means for the company Menatwork, and how do you manage to stay among the best manufacturers and suppliers of building materials in Romania?

In fact, the Australian band was indeed the inspiration for the name of the company. Back in the ‘80s, a young team working long hours in interior design used to listen to their music over and over again. When the young workers decided to open their own business, they named it after the band that kept them company so many times. Today, business as usual means that we continuously adapt ourselves to the requirements of the market. We’ve tried everything and we’ve made all the possible mistakes. Now all we have to do is to collect the fruit of the experience we’ve gained over the years. The fact that we were inexperienced, actually all Romanian companies lacked entrepreneurship experience, was obvious during 2008-2009, when we believed that that was the real value of the real estate market; back then, it was enough to answer the phone to make a sale, and because of that we thought that it is enough.

PERSONNEL TRAINING IS THE KEY FOR DEVELOPMENT

Menatwork

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Both the market and the competition are more mature now…

Sort of. In my opinion, our 20 years of entrepreneurial experience cannot be compared with the several hundreds of years of entrepreneurship in the Western countries. And this fact is obvious when you see the effects of the global financial crisis: in Romania, companies that placed their bets on “low price strategy” are now facing bankruptcy, but they are replaced on the market by new companies adopting the very same price policy. Selling products at the lowest price will only make you weaker, and nobody will benefit from this policy, because behind the lowest price there usually hides a product of very low quality. We believe that the price of building materials shouldn’t be high or low, but fair. We do not operate in the luxury segment of the market, where price is determined by the value of the brand rather

than the value of the product. In our field of business, the price of a certain product should reflect the value of the raw materials and labor encompassed in its production.

Over the years, Menatwork diversified its activity, addressing different areas,

from paints to metal profiles and lighting fixtures. What is the next step?The development strategy of our group was based on the synergies between different product ranges, and their expansion was a natural one. In the past Menatwork was the most important supplier of metal profiles of Lafarge for their plasterboard systems, so we've started producing plasterboard structures; we were the leading supplier for Armstrong suspended ceilings, and this is why we started to produce lighting fixtures for such ceilings. All complemented each other. It was a successful idea and this is the proof that allways you have to stay within

Viorica Grafu, General Manager

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your area of expertise. That is why we plan on focusing on those products we are really very good at. First of all, we will determine the product portfolio for the next few years. We are in the process of restructuring and consolidate the company as part of the game. We intend to focus on a narrower product portfolio, thus enabling us to offer our customers quality products at a fair price; we will not dissipate our efforts producing hundreds of items, but instead we will focus on those with the highest potential.

Areas such as the production of dyes or lighting fixtures require not just

very good engineers and a corresponding production capacity, but also significant investments in R&D. What is the situation at Menatwork?Amid the economic crisis, we have registered a significant decrease in turnover, and therefore, we have chosen to focus on areas where we have expertise and experience. One of the measures we’ve taken was to close the production unit of paints, because of its inefficiency on the oversaturated market. As for the lighting fixtures, we will not give up this segment, but we will reconsider the product range, in the way that we are going to replace the obsolete lighting fixtures with state of the art products using LED technology, energy efficient.

You are not only a manufacturer, but also an importer and distributor of lighting

fixtures. There is an internal competition between similar ranges of your own products and imported ones? How do you manage it?We will continue to import lighting fixtures, but we’ll take care that the imported ones will complement, and not compete with our own products. This way we’re going to be more efficient.

What percentage of the group's turnover comes from exports? Which

are the most popular products?The most successful products are the lighting fixtures, which are mostly exported to Italy and France; 15% from the total turnover generated by lighting fixtures

comes from export. As for the profiles for plasterboard systems and suspended ceilings, the export represents about 5%. For the access floor systems, the export share of the total turnover is 10%.

You also produce fixtures for vine training systems…

This was a necessity due to the decrease in the production of building materials and a logical move – we already had all the necessary equipment. It was just a small investment required for the recalibration of the machine tools. The main clients are the wine cellars, vineyards and independent farmers. Unfortunately, we have encountered difficulties as the clients are facing long delays in receiving the funds from romanian Agency for Payments and Intervention in Agriculture (APIA), and they are forced to postpone the due payments until they were able to collect funds from APIA.

The Group has invested large amonunts in real estate as in land and buildings.

Taking into account the evolution of the real estate market, how would you rate this investment now?The land was purchased aiming for the construction of production facilities, not for

25real-estate speculation, and their value has not fallen over time.

The number of new buildings has been considerably reduced in recent years;

they are no longer springing up out of the Earth as in the period 2005-2009. How do you see the evolution of this sector, having in mind the fact that Menatwork directly depends on the construction industry?In my opinion, Romania shouldn’t suffer from such a decline in the construction industry, because there is enough demand for civil engineering and for industrial ones. In the last five, six years, realtors have developed a strategy based on high-end apartments buildings, overvalued and overpriced, while the real demand was for apartments around 100 square meters, medium finished, for middle class people. Now seems that something is changed.

As a company mainly focused on production, you obviously depend on

raw materials availability and price. Do you source them locally, or from abroad?Both domestically and from import. In the last three years, the prices were relatively constant, with normal fluctuations.

Menatwork supplies construction materials for famous producers. Which

are your most important customers?We produce, for example, metal profiles and accessories for plasterboard systems for Siniat, while being their main Romanian customer for plasterboard sheets. We try to develop the cooperation with our business partners and together, to establish and impose a system of quality assurance.

What measures are you taking to counteract the negative effects of

the economic crisis?We have reduced the number of employees, but this cannot be the only solution and it must not be pushed too far. For example, I have always sought to keep the sales team large enough and well prepared. We have intense training programs for our employees, which has been resumed in 2012 and continued in 2013, because it is essential for the development of the company. In moments like that, the right decision is to bet on the team. In this respect we have decided to improve the capabilities of our management team, by intense training programs, aiming for the new trends of strategic management and the management of change.

Menatwork headquarters in Popesti-Leordeni, near Bucharest

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INDUSTRY INSIGHTS / SPRING 2014 / ADVERTORIAL

Changing the attitude of our sales force, together with the

technological support and product maintenance we've promoted, prompted the manufacturers of machine tools to pay more attention to the requirements of dealers and resellers. This represented a paradigm change for

the industry, which was forced to place the interest of the industrial manufacturers on the top of their priorities.We only sell reliable, productive, worldwide renowned machinery. In time, we've managed to change the misconceptions about Romanian industry, convincing

As a result of evaluations made with our clients over the years, I do know that we have 100% satisfied customers.Today, reviewing what we've managed to accomplish in these 10 years of activity, I realized that there are several things that can be listed as successful achievements.

our international partners that we operate in a competitive environment, with cutting-edge equipment and well-trained engineers operating CNC machines, which are perfectly capable to successfully respond to the requirements of the international market.

10 YEARS OF ACHIEVEMENTS

GreenBau Tehnologie

"CUSTOMERS' SATISFACTION REPRESENTED THE COMPANY'S MISSION FOR 10 YEARS" Eng. Ferry GRINBERG, CEO – GreenBau Tehnologie

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project in the Romanian market. Important machining projects were transferred to Romania from other European countries, from India, China and Americas.By providing free of charge technical support to our customers, helping them to set up new production lines, we also helped them to convince their foreign partners that high quality products can be manufactured in Romania at fair prices.OKUMA machines reliability along with their ability to operate with special technologies such as broaching, hard turning instead of grinding, and rolling; their high productivity made possible to lower the production costs, and the Romanian industry benefited from this advantage in the competition with manufacturers from abroad.Another reason to be proud is the GreenBau service system that we've developed over the years, which is unique on the Romanian market and quite rare at the European level in the field of CNC machine cutting tools.Considering that productivity means reducing of the production

costs, a fast and efficient service is a necessity in the industry.Machines connected to the internet, free of charge serviced remotely via designated computer tools, free of charge support over the phone for customers' service teams, such as personnel training, and the quality of GreenBau's service meant that any potential problem could be solved very fast, for the benefit of Romanian industry.And I've said Romanian industry because OKUMA machines were sold all over the country and our service team get into all these places.Personally, I am particularly proud of the GreenBau team and of everything we've managed to achieve in the 10 years of involvement in the Romanian industry.We have no intention to stop here, we still have many things shipshape and we will continue to figure the best way in which we can help the Romanian industry to evolve. I'm convinced that, in the next 10 years, we'll be doing everything much better than we do it now.

Happy Anniversary,

GreenBau Tehnologie!

I wish you further success in the benefit of the Romanian industry!

Hard turning is replacing grinding

Inside/outside broaching

Parts made by gear cutting and hard turning

In these years, important investments were made by American and European companies, besides the Romanian ones, and we are proud to announce that we took part of some very successful

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WHAT ARE CIGARETTES MADE OF Mr. Chris Gemmell, British American Tobacco’s Operations Director in Romania, talks aboutInnovation and Brand Value.

The tobacco industry has evolved a lot in the last century. It’s been a long journey from the very first print ads, promoting the health benefits of smoking, to the new EU regulations which completely banned the advertising for tobacco products in media, and the billions of dollars spent every year on harm reduction.

II. Why did you choose this specific industry after working 16 years with

one of the largest food companies in the world, and what does BAT mean for Chris Gemmell?

CG. The tobacco industry is extremely interesting on many levels,

professionally it has provided me with a great opportunity for incremental growth and learning: to begin to understand a new consumer, industry, technology, and the challenges of working with excisable product.On a personal level, BAT is a great company, from the very first meeting I was impressed with the talented people in the organization, and the scale of BAT, being the most global

tobacco company with more than 200 brands in its portfolio, sold in around 180 markets. BAT holds robust market positions in all regions and has leadership in more than 60 markets. Not only that but it's a very enjoyable place to work, BAT has a very tangible and positive culture that is present all over the world, I have already met with many BAT employees from across the globe and there is an instant connection.

Your field of expertize combines manufacturing, financial reporting,

supply chain strategy etc. Which are the differences and similarities between food and tobacco industries?Interestingly, there are many similarities

BRITISH AMERICAN TOBACCO

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40years of technological

know-how makes Prymsian group one of the most advanced and largest producer of optical

fibre cables in Romania

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between the two industries, both take a natural raw material and with minimal processing aim to deliver an enjoyable experience for the consumer based on their needs. Both food and tobacco are very personal products where the consumer has a close interaction with the final product, this demands the highest level of quality and consistency. Not only that, but there is a great responsibility to care for the heritage of the brands. For example Dunhill’s roots date back to 1907, when Dunhill Tobacco of London Limited was established on Gentlemen’s Row. More than a century later, Dunhill is our premium international brand.

As an Operation we have to understand

what this means in terms of consumer expectation and how we translate this into quality standards.The key difference would be excise, the reality is the shelf price of a packet of cigarettes is predominantly excise and taxes (roughly 75%) - which means the value of the product multiplies as it moves out of the fiscal bond (warehouse). This doesn't happen with food, the value is added to the product during production and delivery, and financial value changes mainly with margins as it travels through the supply chain.

You’ve started working with BAT in 2013, an important year for the BAT plant in

Ploiești: an investment of EUR 25m was completed, which led to an increase of the production capacity, export capacity etc. Please tell us more about this investment, and about the results and investment plans for the next year(s).I am very proud to have joined at such an exciting time, we essentially doubled the floor space for secondary or cigarette manufacturing and completed the installation of some technology to meet growing consumer

demands for certain brands and formats. Part of this was the installation of a production module to manufacture Dunhill Fine Cut, this is one of the most prestigious brands in tobacco and it utilizes a specific technology that creates a resealable pack to lock in freshness - it has been a great success.

Additionally we have added some capacity on key formats and carried out very important

changes in primary, or leaf processing, to be able to supply the tobacco requirements of the new technology. We have also developed a regional logistics hub in Ploiesti around 8 km from the factory, which has enabled us to supply from Romania much more effectively, thus reducing the lead time to some key markets.The building, announced in 2013, of the total plan,

so the investments and installation work will continue to 2014, and then our key focus is utilizing the new assets to their full potential.

Have you encountered any country-specific challenges in Romania?

It has been a very smooth transition to Romania, I lived in Istanbul for 4 years before coming here, so it was only a 45min flight away, and I would describe more positive experiences than challenges: the level of education, technical skills and language capabilities are incredibly high, 60-70% of the operators in the factory have a reasonable standard of English (as a second language), I've never experienced this in any other country I have worked in or visited, and that's a lot of countries and factories over the years!

What is the current production capacity of the Ploiesti plant?

We have the capacity to make 30Bn cigarettes in Ploiesti, the factory plays an important role within the European and Global network of BAT.

We have the capacity to make 30Bn cigarettes in Ploiesti. The factory plays an important role within the European and Global network of BAT.

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You are in a business which can be described as ultra-FMCG, where

logistics can make or break the entire operation. How do you manage this issue?I mentioned the logistics center being opened in Ploiesti, this is only a small part of our ongoing focus for improvement of delivery on time, in full. We have a Supply Chain Service Centre which is centrally coordinated allowing us to maximize value at a European level, and close coordination with our End Markets, like Romania, enables the product to be on the shelf when the consumer demands it.There is also another factor that one must consider when moving high value products such as cigarettes, where a full truck has a value of roughly one million euro, which is security - we

move fast, but we move securely. Again, this is another element of difference versus foods.

How much from this production is for export and what is the percentage

reserved for the Romanian market?From the total volumes produced in Ploiesti factory, 44 % are volumes for the Romanian market and 56% are volumes for export.

Which brands are produced in Ploiesti?As British American Tobacco in Ploiesti

produces for the local market and for the international one, a number of globally recognized cigarette brands such as Kent - the best-selling cigarette in Romania - Lucky Strike, Pall Mall, Dunhill, Vogue, Viceroy and Rothmans plus some brands with more localised strength, such as MS, Peter Stuyvesant, Cecil, Kings etc.

The global tobacco industry produces around 5.5 trillion cigarettes a year.


What is the market share of BAT in Romania? What percentage of

that market share consists of imported cigarettes?I have a close working relationship with Gemma Webb, the General Manager of British American Tobacco’s commercial business in Romania; the team have achieved a very strong market leadership position with over 50% market share imported cigarettes contribute around 12% of the share volume.

What does “innovation” mean in the tobacco industry?

Innovation comes at many levels, for instance, product innovation – in the last 10 years we have seen more exotic filters in the market place, I will use the example of filters containing menthol capsules. This is a product where the consumer can choose in an instant whether they desire a regular or menthol cigarette, even half-way through their cigarette by clicking a small menthol capsule within the filter to release the flavour and aroma. It’s a

truly transformational product and BAT is taking the lead in the market with 1.6% market share.But not only that, extensive funds are invested in harm reduction by BAT. Harm reduction is about finding practical ways to minimize the health impact of an inherently risky activity or behavior, without seeking to stop it entirely. An example of harm reduction that is familiar to most of us is the use of seat belts and airbags in cars. The science of tobacco harm reduction is complex, extremely challenging and spans many scientific disciplines. Our annual Research & Development spend is significant, which reflects the continued importance we place in this work area. (GBP171 million Research & Development spend in 2012.)

How does the special packaging influence sales?

The packaging primarily serves a functional purpose to protect the product, however the design of course will help adult consumers to identify with their chosen brand and enable

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Checking out one of the raw materials used for cigarette filters.

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some communication of a product feature – when it comes to positively influencing sales, we have to consider what the benefit offered to the consumer is. For example, Dunhill Fine Cut has a high barrier inner film and a reseal function – this helps keep the moisture of the cigarette, a key factor in an enjoyable smoke, consistent throughout the lifecycle of the product. But we also have cases, for example Kent Deluxe 100’s in which the packaging hasn’t changed drastically for over 40 years – it is the quality of the product on the inside that creates consumer loyalty and this is why we focus on superiority throughout the product, not just in packaging.

How would you describe your first year with BAT?

It has been a great year, a very smooth transition and a solid set of results delivered in 2013 for the Romanian Operation. This is a testament to the team of people I am working with, their openness to change and their appetite for success.I understand it can be difficult being a mid-career recruit, especially when stepping in to an Operations Director role which historically

had never been filled by an external candidate – but the reception and support couldn’t have been better. I did joke with some colleagues that it feels like I have been a BAT employee for 17 years, but I only realised it 12 months ago.

Are you a heavy smoker?

Heavy consumption is definitely not a prerequisite for a successful career at BAT, it's not part of our recruitment criteria, however I am a firm believer that informed adults who choose to smoke should have the freedom to enjoy legal tobacco products manufactured at the highest quality standards.When it comes to consumption, it is estimated that some 330-660 billion cigarettes a year are illicit - smuggled, counterfeit or tax-evaded in other ways. This is about 6-12 per cent of global consumption. The losses in unpaid tobacco taxes are around US$40 billion worldwide, money that many governments cannot afford to lose. Legitimate tobacco companies are also losing revenue - from US$5-10 billion a year. On top of lost revenue, investment in brands, jobs and distribution networks is also undermined. It’s important to keep this in mind.

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Among renewable energy sources, solar energy is the only one that does not require very large

investments and is virtually available for anyone, being interesting both for companies that want to invest in energy parks and for households. After the sharp drop in the price of silicon in 2011 and the invasion of Chinese products on the European market at dumped prices, factors that seriously affected European producers of photovoltaic panels, the year 2013 brought a stabilization of raw material prices and, more importantly,

the agreement concluded by the European Commission with Chinese producers that aims to eliminate unfair competition and protect the European manufacturers.In these circumstances, more and more European companies (re)invest in the production of photovoltaic panels. One of these investments is Altius Photovoltaic plant in Giurgiu, currently the only manufacturer of photovoltaic panels in Romania. We discussed the future of renewable energy and the business opportunities in the field with Mr. Ion Murgescu, CEO of Altius Fotovoltaic.

II. What is the value of the investment in Altius

Fotovoltaic?

IM The photovoltaic plant in Giurgiu is the result of an

investment of eight million euros, of which 3.2 million is government aid, and was inaugurated in February 2013. As a result of this investment, we have the ability to produce photovoltaic panels of 33 MW per year, meaning 350 daily, our 64 employees working around the clock, in three shifts. By the end of February, we’ll double the production capacity. It is not just the quantity, the quality

The EU aims to get 20% of its energy from renewable sources by 2020. Renewables include wind, solar, hydro-electric and tidal power as well as geothermal energy and biomass. More renewable energy will enable the EU to cut greenhouse emissions and will make it less dependent on imported energy. And boosting the renewables industry will encourage technological innovation and employment in Europe. This, member States support this energy policy by granting subsidies for the production of energy from renewable sources.

Altius Fotovoltaic

SOLAR ENERGY CAN BE ATTRACTIVE FOR HOUSEHOLDS AND INVESTORS ALIKE

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matters most – and Altius, thanks to cutting-edge equipment and attention to detail, can offer a guarantee of 25 years for the power of its photovoltaic panels.

Are you hurt by the competition of Chinese

companies? How do you counteract?In 2010-2012, the price of silicon sharply decreased by 30-40%. In the same time, the market was invaded by Chinese products. Back then, several European companies went bankrupt, because they could not compete with the dumped prices charged by the Chinese

manufacturers. Today, due to the anti-dumping measures taken by the European Union, there is a number of companies from China who have agreed to sell solar panels at the minimum price of 0.56 euro/Watt. But we are dealing not only with Chinese manufacturers, but also with those from Malaysia, India, and Taiwan, that sell solar panels with prices between 0.48 to 0.51 euro/watt. Therefore, we are forced to work with a very small profit margin to keep the price as competitive as possible. Beside offering competitive prices, we also try to educate the market.

We started workshops and seminars and we began explaining succesfully the disadvantages which may occur in case of purchasing poor quality solar panels and the importance of a guarantee that the customer can rely on.In order to promote the quality of our products, we also participate, with success I might say, in various trade fairs, from those specialized in energy to the more consumer-oriented ones, like TIBCO.

What are the characteristics of a quality photovoltaic

panel? What problems may arise in the case of the acquisition of

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Solar Panel Characteristics

some poor quality ones?Photovoltaic panels must withstand significant variations in temperature and moisture, while retaining the technical characteristics throughout their lifespan. In order to withstand the elements, the quality of lamination is essential – the EVA foil which is used for lamination must be of the highest quality, and the degree of polymerization, after the lamination process, must be above 75%. We guarantee that the solar panels produced by Altius Fotovoltaic wll still offer 80% of initial power after 25 years of usage. This is very important for our customers – they actually acquire energy and they calculate the benefits based on the energy provided by the panels they install. In the case of poor quality solar panels, the power starts to sharply decline after 5-6 years, and investors do not receive the expected benefits. And if those panels are produced by an Asian manufacturer, it will be very difficult for the buyer to claim the guarantee – it's hard to imagine that somebody from Romania would sue the Chinese producer for its failure to comply with the contractual obligations.Problems that may occur could be even more serious, as it happened in Italy for example, when the photovoltaic panels, due to an improper insulation, have been damaged by moisture, failed and caught fire. This also happened to panels installed on rooftops, and several houses burned.Each month, we test the quality of polymerization and the force required to detach the EVA film, to ensure that we only offer products of the highest quality.

What are the benefits for those who invest in

photovoltaic panels?Being modular systems, solar panels can be installed close to consumers, thus eliminating the loss generated by electricity transmission. In

addition, photovoltaic panels can be installed virtually anywhere – on the rooftops of houses and civil buildings or assembled in energy parks, thus attractive to many categories of investors. Photovoltaic energy produced and supplied to the national system of electricity distribution is subsidized and, according to our estimation, the investment pays off in 5-6 years.

How would you rate the interest of households from Romania

to install photovoltaic panels?Unfortunately, because of the current bureaucracy and lack of information, few are interested. But I think this will change togheter with the new regulations on electricity supply, when the connection procedure will be simplified and a fixed amount will be offered per kilowatt as subsidy. However, it is a growing area - Altius Fotovoltaic managed to install solar panels in 2013 with a total power of 10 MW. If ANRE will maintain its policy of sustainable energy, the number of those interested in investing in photovoltaic energy parks or in individual kits will continuously increase.

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“

COMPLETE SOLUTIONS FOR CONSTRUCTION FINISHING WORKS

Finishing the interior and the exterior of the buildings of a construction project requires a wide range of

materials – metal profiles, paint, decorative coatings and adhesives. If you can integrate all these materials in a system in which each product

meets the same quality criteria, then you already have an important advantage over competition because you can deliver a complete solution to your customers, a trusted system they know they can rely on. When we first started to produce paints, other start-ups in the industry

"Back in 2003, we predicted that a company looking to find a path for healthy growth in the production of building materials industry should provide complete solutions to its customers and should be able to guarantee for its products," says Mr. Daniel Guzu, general manager of Duraziv.

"I LEARNED THAT IF YOU WANT TO SUCCEED YOU NEED ONE BASIC INGREDIENT: PASSION FOR WHAT YOU DO."Daniel Guzu

Duraziv

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were mostly focused on niche products. In that period, many new companies were founded and it seemed the right thing to focus on specific fields, to be specialized in certain domains. We had a different approach," explains Mr. Guzu his successful development strategy.

"Identifying a niche and offering it was a recipe that has worked in the period of the boom of the industry. Now, however, companies that focused on integrated development are in a better position. We can say that daring to think differently represented the birth of Bau Profil (metal profiles) product line," said Mr. Guzu. Sticking with this strategy, Duraziv launched a line of adhesives for the construction industry in 2007, and it launched its decorative paints line in 2010. "This development was driven by the same philosophy. We wanted to be able to provide whole systems

Odourless Paints

Duraziv was the first company in Romania which has received the right to use the eco-label for an industrial product. In 2011, it has launched on the market the first certified eco-friendly paint, DURAZIV Odorless Eco Label.DURAZIV Odorless paint had passed many tests before receiving this certification. Its special characteristic (odorless) is the main differentiating factor from other premium washable paints. This characteristic has two major advantages. For the final client, it means that after painting, he or she can sleep in the room in the same day the room was painted. They can move in the refurbished house immediately. And the handyman who paints the house does not inhale toxic vapors. The launch of the eco-label paints "Duraziv Odorless" wasn’t supposed to generate an impressive turnover overnight. But it was more of a statement for the involvement of Duraziv in the production of environmentally friendly construction materials and the company’s commitment to educate the market.

and not just individual products. We carefully developed each part of each system, aiming to offer products which will stand the test of time. It has practically become a core attribute of all our products." Adhesives are a core component of the construction finishing stage. But for Duraziv they represent much more than that. It is an opportunity to express our creativity, to bring added value, to innovate. In the first year after we started the production of adhesives, Duraziv laboratories identified Kauciuc, an additive consisting of nano-particles of elastic rubber that increase the grip and workability of construction adhesives. Products based on this technology contribute to the superior durability of construction finishing, and the work can be done a lot faster. Duraziv incorporated new innovation every year into its line of adhesives for construction, creating new products that will have a major

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impact on the market. For example, waterproof grouts gradually replace old technologies, being easier to work with and offering superior results in various construction projects. We have created a broad category of products with fast curing, that makes possible for the works to be done overnight. We aimed to make construction works less seasonally dependent. Therefore, we offer a range of products that can be used at low temperatures, down to -5 degrees Celsius.

INVESTMENTS IN WORKFORCE AND PRODUCTION FACILITIES

But great results cannot be achieved without adequate investments - over EUR 14 million to date for Duraziv group. The first division of Duraziv was the metal profiles one, established ten years ago. The activity started with the production of metal structures and accessories for plasterboard. We have invested about EUR 3.5 million in this division. The total production capacity for this product line is 10,000 tons per year. In 2007 the foundations were laid for our second division – construction adhesives. Adhesives manufacturing division was launched following an initial investment of 7 million euro in a modern factory located in Popesti Leordeni, with a production capacity of 200,000 tons per year. By now, the total investment allocated for the development of this division exceeds

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8.5 million euros; the company is one of the top five producers in this area at national level. The products made by this division range from construction adhesives, sealants, waterproofing grouts and screeds, to a wide range of special products. In June 2010, Duraziv started the production of washable paints and decorative plasters; the initial investment in this division was over 1 million euros. The following year we launched a modern production line that can achieve a total capacity of 50,000 tons a year. By now, the total investment in the paints and coatings factory is of 2 million euros.

All our production facilities are toded up with the most up-to-date equipment and are ready to mass produce high quantity of construction materials. In Popesti Leordeni we have at the moment three production facilities and several research laboratories. Factories will be scaled-up or improved in the future in order to increase production, whether there will be sufficient demand. Every investment we made is a long-term one. We believe that for each of these divisions there is a huge development potential.

For example, paint consumption per capita in Romania is well below the European average. The thermal rehabilitation program for old buildings is, years after its beginning, still in its infancy. There are a lot of opportunities in the near future.

"Each product category has been designed for optimum performance and maximum endurance," says Mr. Guzu. Kauciuc increases the grip and workability of construction adhesives, and improve elasticity and waterproofing of paints. Duraziv products, enhanced by the

addition of Kauciuc, contribute to an increased endurance of projects. In addition to this, Duraziv spends substantial amounts of money on research and development of new products in order to stay one step ahead of its competitors.

Production and distribution of construction adhesives and metal profiles is carried out entirely by Duraziv, which now has more than 140 employees. Throughout this period of crisis, the number of employees grew by 20 percent annually. There is also a separate team working in the decorative paints and plasters factory. These products are also marketed by the Duraziv sales team.

NEW PARTNERSHIPS AND GROWTH OPPORTUNITIESDuraziv products are delivered across multiple channels. In recent years the importance of Business to Business segment has greatly increased; Duraziv managed to be present on many of the important construction sites in the country. For example, last year Duraziv was the most important supplier of decorative coatings for the insulation of old buildings in Bucharest. We have inked important deals with several real estate developers, mostly for projects on the South outskirts of Bucharest; Duraziv also supplied construction materials for public building and it is an important partner for many of the retail chains in Romania, such as Flanco.

There are also partnerships with internationally active companies. They may not represent a large stake of our business at the moment, but it is a sign of the recognition of our hard and innovative work and we are confident that we can compete at an European level.

FOCUS ON QUALITYTwo different routes have been taken by the producers of building materials in the past. One consisted of the development of cheaper products, to meet the market's needs. In these years there was a fierce price war. Even though, in some cases, prices apparently increased, in practice various promotions carried out by every player in the market cancelled the price rise. Basically, every contractor involved in construction finishing business in recent years has benefited from lower prices in comparison with previous years.

Duraziv has chosen a different development path; we thought that fighting a price war would significantly hurt our business.

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We decided to place our bets on innovation and to make products of higher quality. We have tried and mostly succeeded to offer products with unique selling points, to differentiate ourselves from competition and to incorporate in our materials technology and characteristics which are relevant to our customers. Many of them can be easily classified as premium products, even if they were marketed at lower prices compared to similar construction materials. "The chosen strategy allowed us to recover losses from previous years and even to record a small profit last year, which demonstrates that we’ve made the right choice. Entering a price war could have taken us in the opposite direction," says Mr. Guzu.

If you don’t love what you do, you can’t give 100%I am a chemical engineer. the construction materials sector offered me the opportunity to develop myself and to make use of the skills and expertize I have accumulated over the years. I don't think there are predetermined recipes in the business. If there were, we would all be successful. Business is like life, with ups and downs. The most important thing is to do what gives you the highest satisfaction, what makes you happy and motivates you; only then you’ll work at full capacity. If you don’t love what you do, you can’t give 100%. Your ability to grow and develop the business will be limited.Duraziv is a business which perfectly suits my personality, it offers me the possibility to do something I like and to use my knowhow. I'm sure that if you do put passion in what you do, the results will come in time. But you’re seeing the benefits every day. I’m talking about the satisfaction of doing something that represents you, which emphasizes your personality. Whenever I did something I’ve liked, I was successful, even if sometimes I had to be patient, to be persistent and willing to learn new things.Our slogan “New ideas, sustainable projects” encompasses both the brand promise and the mission that we have assumed right from the beginning – to continuously focus on innovation and quality and to offer competitive products which meets both the needs of the contractor and the expectations of the final customer. Producing metal profiles, dry mortars, paints and plasters, we have outlined a portfolio of products that represents a complete and high quality finishing solution for the construction industry (insulation systems, waterproofing systems, wall finishing etc.).

Daniel Guzu, General Manager of DURAZIV


MOVING FAST ON THE INFORMATION HIGHWAY

Prysmian Group

42

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In a world where information needs to travel faster and faster, and we need more and more energy to power up our digital life, Prysmian is the company which produces the highways for all this information and energy – the cable systems we use to send and receive data, connect to the Internet, watch cable TV and turn on the lights. Many of these cables are produced by Prysmian in Slatina, Romania.

More about Prysmian and the plant in Slatina in the following interview with Mr Giuseppe Ferri, COO of Prysmian Romania.

II: The Energy Cables and Systems and Telecom Cables and Systems division

of Pirelli, which has been acquired by Prysmian in 2005, has a long history, dating back 135 years ago. Still, for those who know little about it, the connection between tyres and cables systems for energy and telecommunications may look like a strange marriage. Can you tell us more about the reasons behind the Pirelli investment in cable systems and the connection with its other, more famous division?

GF: Over one hundred years ago, when it was only a rubber producer,

Pirelli decided to enter a new business which, for that era, was a natural extension of their core business: the Italian company started to produce cable systems. And that happened several years before the first tyre bearing the Pirelli brand was out of the gate of the factory. The connection between the tyres and cables was quite obvious: rubber was used in the manufacturing process for both lines of products. Actually, at that time, in Italy, it was quite common for companies to produce both tyres and cables.

The Company went through a heavy restructuring process in the early

2000’, just before Prysmian, indirectly controlled by The Goldman Sachs Group Inc., and signed an agreement to purchase the Energy Cables and Systems and Telecom Cables and Systems

activities of Pirelli & C. S.p.A. Which was the aim of the restructuring process? Was it to make the division an easy sell?In the beginning of the 2000s, a little revolution took place in Pirelli. Pirelli was set to enter telecom business, not only as a cable producer, but as a major player. And to achieve that, they bought Telecom Italia. Selling the cable division was a strategic decision – Pirelli’s strategic

direction changed 180 degrees and the cable division wasn’t considered a core business.

The cable division of Pirelli and, owned later on by Prysmian, was, from the

very beginning, set on geographical expansion – building new plants or acquiring existing businesses. One of those was Siemens AG’s energy division, including one of its factories in Romania - ELCARO S.A. Is Prysmian one of the reasons why Romania has such a fast broadband Internet connection?The cables produced by Prysmian are used by most of the Romanian telecom and

40years of technological

know-how makes Prysmian group one of the most advanced and largest producer of optical

fibre cables in Romania

44


energy companies, including Enel, E-On, Romtelecom, RCS-RDS, and all the other most relevant operators; therefore we can say that the information travels through our cables. Very, very fast, I might add. As a consequence from Prysmian being the most advanced and the largest producer of optical fibre cables in Romania , operating in the country with different names but with the same technological know-how for the last 40 years, we can be considered for sure as one of the main enabler to the fast growing broadband connections’ path, together with all the business partners we supported during this long time.

Which is Prysmian’s main competitor on the Romanian market?

We encounter a stiffer competion on the lower segments of the market, where a lot of players from Europe and the Far East compete mainly on price, thus offering a questionable product quality; however, our customers can normally appreciate the difference between a standard product vs an outstanding product, and this plays in our favour. Where we lead the market is where product quality, performance and innovation are the key drivers….and within this arena our competitors’ list is extremely limited. In general, I could say that we respect and we are well prepared to face a “fair” competition, whilst we are working with the Romanian Cable Association to prevent “unfair” competition and alert the market about the risks connected with poor quality products.

Giuseppe FerriCOO of Prysmian Romania

Prysmian operates in an area of high technology, where R&D is crucial. What

role is the Romanian factory playing in the R&D activities of the group?Prysmian has always attributed key strategic importance to Research & Development in the management and development of its business. The Group has: 17 Research & Development Centres (Italy, France, UK Germany, Spain, United States and South America) with headquarters in Milan; it has established collaboration agreements with major universities and research centres (including the Polytechnic of Milan and the National Research Council of Italy - CNR). But the implementation of newly developed technology is always done locally, and each production facility contributes to the global R&D programme.

Being a global company, Prysmian produces cable systems for the

entire world. What percentage of the total production of the Romanian plant is exported and what percentage is for the local market?We distribute locally slightly more than 20% of the telecom cables production. For the energy industry, almost half of the cable systems we produce is for Romanian industry. This happens because, from the logistic point of view, it is easier to distribute telecom cables – they are lighter systems and, therefore, the transportation cost is lower. In case of energy cables, which are heavier, it makes more sense to produce them locally.

“I LEARNED THAT IF YOU WANT TO SUCCEED YOU NEED ONE BASIC INGREDIENT: PASSION FOR WHAT YOU DO.”

45

1973Aluminum Processing Factory (IPA – ALPROM) started to manufacture the first cables in 1973.

1991ELCARO S.A. was established in 1991, as a separated company, being an important layer on the Romanian cable market.

1994ELCARO outruns its competitors on the local market, delivering constant quality at the right price. The cables produced by ELCARO are sold in countries like Spain, Germany, Israel, Hungary, Egypt, Brazil, Saudi Arabia, South Africa, Slovakia, Austria, etc.

1996SIEMENS AG Germany became the main shareholder of ELCARO in 1996.

1998In October 1998, Pirelli Cavi e Sistemi acquires the power cable businesses of Siemens AG globally, and Pirelli became the main shareholder of ELCARO.

1999In August 1999, PIRELLI bought all the shares and became the sole owner of ELCARO, has change it name to PIRELLI Romania Cables and Systems S.A.

1999In 2005, Prysmian, indirectly controlled by The Goldman Sachs Group Inc., signed an agreement to purchase the Energy Cables and Systems and Telecom Cables and Systems activities of Pirelli & C. S.p.A. Formation of Prysmian Cables & Systems.


You’ve mentioned your main customers on the Romanian market. What about suppliers?

We mentioned just a short list of our current customers’ portfolio, just to name someone out of the hundreds of great business partners we are honoured to work with. Following the same approach, we can state that we are cooperating with the most qualified suppliers’ base, both for our Raw Materials’ purchasing needs and for all our services, leveraging both on the most qualified Romanian producers (our neighbour ALRO is just an example of them) as well as on the most specialized international suppliers operating for our industry. What’s important to remark are two basic principles: a) The quality of the materials cannot ever be subject to any compromise (we clain the best product, we clain the best quality of the materials); b) The competitiveness of our Suppliers’ base must (significantly) improve year on year to follow what our customers want: an always better product at an always competitive cost.

How do you see the development of this industry and what are your expectations

for the next year?Through continuous innovation, Prysmian’s target is to always be at the forefront of the industry, providing the best solutions for telecom and energy cables. Businesswise, in this difficult financial situation, we managed to maintain the revenue of Prysmian Romania stable and we expect to do so next year as well, maybe to see some improvement. We recently launched a programme within a company, offering employees the opportunity to buy Prysmian stock. All of them were willing to do so and they are now Prysmian shareholders. The total number of the employees has demonstrated confidence in the group. This is a very strong signal for us and for the future of the company.

Prysmian locally distributes slightly more than

20%of the telecom cables production

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INDUSTRY INSIGHTS / PRIMĂVARĂ 2013 / NEWS

For more than a century, S.C. UZTEL S.A. operates in the field of equipment for the oil industry, and specializes

in the design, production, repair, marketing of petroleum installations, as well as the manufacturing of forged and molded parts, spare parts for oilfield equipment and industrial machinery, and machine tool repair and maintenance.

“Romanian-American Company”, established in 1904, activated in the field of drilling, processing and distribution of oil products

in Romania. The company was nationalized in 1948, and its activity was diversified; the Company started to repair oilfield equipment.In 1950, the Company it was renamed “Plant Teleajen - UZTEL” and became an independent company, specialized in the manufacture and maintenance of equipment for petrochemical industry, and it was no longer involved in the oil processing activity. In 1958, the company was taken over by the Ministry of Petroleum and Chemistry.

2014 marks 110 years since the establishment of the company - Romanian-American Society was founded in 1904 by Standard Oil, near Ploiesti, and renamed UZTEL in 1950 - and 10 years since the privatization of UZTEL.

SOLUTIONS FOR CUSTOMERS'PROBLEMS

UZTEL SA

49

Since 1963, it became part of the General Directorate for the Construction and repair of Oil Equipment. In 1966, the company was subordinated to the former Ministry of Oil.In accordance with Law 15/1990, SC UZTEL S. A. became a joint-stock company. The company was privatized in 2004, most of its shareholders being Romanian citizens.After privatization, UZTEL went through hard times. Recurrent expenditure exceeded the company’s revenue, which led to the accumulation of debt, default, and finally to the opening of the insolvency proceedings. On September 2010, analyzing the file 4732/105/2010, the Prahova County Court decided the commencement of reorganization procedures of SC UZTEL SA. Through the application for opening of the insolvency proceedings, the Company declared its intention to revamp.Since the opening of the insolvency proceedings (September, 2010), S.C. UZTEL S.A. passed through various stages of judicial proceedings, in accordance with the law no. 85/2006, culminating with the success of its Judicial Administrators (Euro Insol SPRL – represented by the attorney Dr. Remus Adrian Borza –, and Euro Insol Consulting SPRL Ploiesti – represented by the attorney Alina

Mariana Maer), having obtained the approval of the reorganization plan proposed in June, 2012, according to the decision of the UZTEL’s Creditors’ Assembly.Special administrators and the executive management of the company have implemented an action plan designed to improve the economic situation of UZTEL. Starting from a loss of nearly 4 million euros in 2010, through the efficiency measures undertaken, the company become profitable in the

first year after the opening of the insolvency proceedings, recording an accounting profit of 1.2 million euros in 2011, and nearly 0.8 million euros in 2012. Furthermore, UZTEL has accumulated significant cash reserves, and conducted staggered payment of debts to creditors.Economic and social

advantages of a successfully completed reorganization are obvious - a functional and profitable company generates benefits to its shareholders, is able to pay its debts, thereby helping to improve the business environment and contributing to the State Budget. Company owns important intangible assets – the brand value of UZTEL and the certified international recognition of its engineering know-how entitle UZTEL to reclaim its leadership position on the market.

40years of technological know-how makes Prymsian group one of the main wanblers of something.

UZTEL ASSOCIATION

83.84% of share capital449.83K shares

INDIVIDUALS

8.2% of share capital440.213 shares

INDIVIDUALS

7.96% of share capital426.946 shares

OWNERSHIP STRUCTURE

INDUSTRY INSIGHTS / PRIMĂVARĂ 2013 / NEWS

UZTEL cannot increase its working capital through loans, due to legal constrains; The only way to obtain funds for new investments is to increase its turnover and profit, its cash reserves being restrained by the staggered payment of debts.By continuing to manufacture equipment for petrochemical industry, the Company considerably increases its market share and hence the value of its assets, which is preferable to the liquidation of the company and the sale of its assets to cover part of the debts (unused assets undergoes inevitable degradation and destruction, until disposition).

UZTEL’S STRATEGY FOR 2014- 2016 CONSISTS OF:INVESTMENTS IN NEW EQUIPMENT AND TECHNOLOGY Roughly 2 million euros will be used for acquisition of new machine tools and to refurbish the production facilities, in order to improve manufacturing processes and energy efficiency, and to reduce environmental impact. All these investments are urgently needed, to be able to achieve the aim pursued, namely: increase in revenue from operating activities in order to carry out the reorganization plan of the company, which provides for the full payment of creditors‘ claims.THE CONTINUOUS IMPROVEMENT OF THE INTEGRATED MANAGEMENT SYSTEM (RESEARCH-QUALITY-ENVIRONMENT-HEALTH AND SAFETY AT WORK) BY:

continuity of the certification system and product licenses, namely: ISO 9001, ISO 14001, ISO 18001, API 6A, 6D, 10D, 16A, 16D, 16 C, GOST-ROSTEHNAZOR, PED 97/23/EC;obtaining new product licenses: API 8C, 7-1, 7-K;a continuation, renewal and protection of the trademark of the company, as well as the renewal of authorizations relating to

51UZTEL’S MAIN CUSTOMERS

DOMESTIC MARKET OMV PETROM SA, E&P DIVISION BUCHARESTrepresents on average 30% of the annual turnover of the companyPETROFAC SOLUTIONS & FACILITIES SUPPORT SRL BucharestAUTOMOBILE DACIA SA, PitestiPETROTEL LUKOIL SA, PloiestiFORAJ SONDE, CraiovaDOSCO PETROSERVICES SRL, BucharestTACROM DRILLING SRL, PloiestiSTRATUM ENERGY LLC ROMANIAEXPERT PETROLEUM SRL, Targu-MuresUPET SA, TARGOVISTE

FOREIGN MARKETS: NIS NOVI SAD, SerbiaABB PROCESS INDUSTRIE AIX-LES BAINS CEDEX, FranceARRAY HOLDINGS, S.U.A.OMNI VALVE LLC, S.U.A.PT INTI FAJAR PRATAMA, IndoneziaIAL ENGINEERING SERVICES LTD, Trinidad TobagoDEEP DRILL EQUIPMENT, NetherlandsROBKE ERDOL UND ERDGASTECHNIK, GemanyWOOD GROUP AMESA, Venezuela.

environmental protection and health and safety at work, in accordance with the legislation in force;design and technology incorporated into Company’s new products to be protected through international patents.

ALLOCATION OF 3-5% OF TOTAL BUDGET EXPENDITURES FOR THE DESIGN OF NEW PRODUCTS AND TECHNOLOGIES VERSUS 1.5%, AS CURRENTLY ALLOCATED.UZTEL aims to maintain and increase its market share domestically and internationally, by increasing technological performance and quality of products and by diversification of its UZTEL will promote its brand and products by participating in national and international tenders, penetration of new markets, through the establishment of joint venture companies, by creating a network of agents and dealers, and by participation in trade fairs around the world. So far, the company has been present with own booth at different trade fairs, such as: TIB, EEE and EXPOPETROGAS in Romania, ADIPEC in United Arab Emirates, NEFTEGAS in the Russian Federation, SAOGE in Saudi Arabia.As a result of these actions, S.C. UZTEL S.A. estimates that will conclude the 2014 Jubilee year with an increase in turnover and profits by 20% compared to the year 2013.customer portfolio.

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After 14 years of continuous investments, an industrial wood processing platform,

modern and complex, now in Reghin operates consisting of 2 separate production facilities, employing over 800 people.

Kastamonu Romania produces and sells door panels (HDF panels for f lush doors) under its own registered brand - "DOORPAN".

With an annual production of over 17 million units, produced by the two existing press lines, Kastamonu Romania is among the world's largest manufacturers in the industry, covering about 10% of the global demand for door panels.

With the commissioning of the new chipboard plant, the result of an investment of 150 million euros, Kastamonu Romania will also position itself among the leading

companies producing raw and melamine-faced chipboard in the region.

Kastamonu Romania produces raw chipboard sheets with a ranging thickness between 8 and 40 mm, using a press for continuously producing chipboard, with an annual capacity of 500,000 cubic meters. Chipboard production is used for both internal use, and for resale. The standard size of the chipboard sheets

Kastamonu Romania is the result of a successful investment project, involving impressive financial, technical, and human efforts. Kastamonu Entegre, Turkey's largest player in the wood industry and one of the top players worldwide, has acquired the majority of shares of Prolemn factory located in Reghin, Romania, in 1998, and since then the company has udergone through a comprehensive process of production diversification and modernization.

AN OPEN DOOR TO QUALITY AND DIVERSITY

Kastamonu Romania

53

is 2,800 by 2,070 m, but, on request, we can also produce special formats.

We also have two melamining presses for MFC production, with a total capacity of about 20 million sqm/year, and an impregnation line or decorative paper which can produce about 50 million sqm/year. The thickness of the MFC sheets produced by Kastamonu in Reghin varies from 8 to 38 mm. The company keeps a permanent inventory for all MFC models in the 18 mm thickness assortment.

Kastamonu Romania currently produces a MFC range named VISION, comprising in 100 different decors. At the same time, to highlight the design and colors of the current decor collection, a new structure has been implemented: ST13 – Supermat. It complements the range of existing structures and offers new possibilities and pattern combinations, resulting in some interesting or even fanciful effects, adding sophistication and personality to the furniture.

An essential element of the MFC panels and of the door panels is the design: “Purchasing furniture is a matter of taste,” says Mr. Mihai Suciu, sales director of Kastamonu Romania. “To find the best design solutions, our designers and engineers maintain a close collaboration with our customers and decorative paper manufacturers, to ensure that our products always meet the current market requirements and design trends”, adds Mr. Suciu.

In 2014, Kastamonu Romania intends to develop and diversify the range of products offered on the local market, both through the addition of new products in the portfolio of Kastamonu Romania and through the distribution/resale of products manufactured in other factories belonging to Kastamonu group.

A first step has already been taken with the inclusion of the ultra-gloss decorative

sheets GlossMax, produced by Kastamonu's factory în Gebze, Turkey, in our offer. GlossMax sheets are produced with the latest available technology, having an upper layer reinforced by exposure to UV rays, which provides very good resistance to fading, but also to the action of chemical agents or mechanic abrasion. „We are

Changing the company name from Prolemn in Kastamonu Romania, in April 2012, aimed to emphasize the alignmentin the complete integration of the Romanian branch to the brand values and the corporate identity of Kastamonu.

KASTAMONU'S SHAREHOLDERS

ROMANIAN GOVERNMENT

0.9%INDIVIDUALS

0.1%

KASTAMONU ENTEGRE A.S.

99%

confident in the success of this product, taking into account the quality-price ratio offered; we are also encouraged by the fact that, during the BIFE-TIB trade fair, when we introduced the product to our partners and to the public, it was very well received,” says Mr. Suciu. „GlossMax decorative sheets provide additional shine and elegance to the furniture, at the same time allowing combinations. Right now, the range of available decors is limited, but it may be expanded if there is enough demand from our customers,” adds Mr. Suciu.

The next step for Kastamonu Romania? “We can confirm that we have installed a new production line, for kitchen worktops, with the production scheduled to begin in early 2014. We have a new collection of decors for kitchen worktops, which fit current market trends, and we are able to offer custom finishes as well,” reveals Mr. Suciu from the development plans of Kastamonu Romania.


“

”

I remember that, when I was much younger than today, when my family had something to celebrate or they were simply in the mood of going out, they used to take me with them to their

favorite restaurant: Panciu. That was my first contact with the brand that began to assimilate with quality wine. But the years passed by, and that restaurant in Bucharest, after it changed its name and owners several times, ended up a ruin. And, as Panciu restaurant disappeared from Bucharest’s landscape, wines labeled Panciu disappeared from the shelves. But one cannot simply throw away five centuries of tradition – this tradition is deeply engraved in the consciousness of the people born in the Panciu region; it is more than a name, more than a brand. It’s their history. And one of them, Mr. Daniel Guzu, returned to his homeland to revive a legendary name: Casa Panciu. Mr. Guzu was kind enough to tell us the success story of this famous vineyard.Dan Eberhat

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HEALTHY FOOD AND QUALITY WINES

Eight years ago I've purchased from an aunt a plot of about half a hectare in Tifesti, Vrancea County. I have a special connection with these places.

I grew up here and it is here were I found beautiful and valuable things in which I believe, and for which I'm fighting today. My grandfather was a vineyard owner. I remember that, when I was a little child, I used to play through the in the vines while grownups were working hard. That land acquisition from 2005 aroused nostalgia in my soul. Now I like to think it was some sort of "call of the land". It lit a spark somewhere in me, and that spark has grown into a passion which burns in flames today. Vines have always been an integral part of people's lives in the Panciu area. Grapes shaped the lives of those people. Even during the communist time, people living in this region seemed to be freer than others. Vines even allowed them to be some sort of small entrepreneurs. They invested in their vineyards sweat, dedication, and money.

REVIVING TRADITIONAfter I bought the plot of land in 2005, I thought it would be a great idea to put the basis for a small family vineyard. I wanted it to be something for the soul. To be able do that, I had to buy some more plots, and I slowly came to dream of reviving the reputation of the Panciu vineyard. Plots were already planted with vines in the Panciu area, but for increased efficiency it was clear that we needed

a financial injection. Fortunately, I was in the position to invest. The problem was that, in order to be productive, I needed adjacent plots. There was enough fallow land, but it was very difficult to find the owners and sign the papers – some of them were abroad. Subsequently, various owners in the area have increased the prices of their properties, becoming aware of the fact that there is a buyer interested in their plot. It was an interesting and rewarding adventure. Now, we want to extend the area with vines. I have invested approximately 15 million euros in these fields by now. Given the history and beauty of these places, I decided to invest in a wine cellar and a thematic hostel, which will soon be open for the public. In Romania there are such beautiful places, with interesting stories worth telling and promoting. For those who want to get in touch with this history, we are building this mansion right in the middle of the vineyard, and we are offering them the possibility of visiting the wine cellar, of seeing how the wine is bottled, but also of tasting our products while admiring the wonderful landscape of Vrancea Hills. From the very beginning, I have decided to concentrate on preserving the tradition of this vineyard. We wanted to win the confidence of wine lovers by producing the best wines with the most modern technologies, and we were supported in this endeavor by the passion of our oenologist, Sorin Macoviciuc, and by the advice of renowned Italian specialists. In the spirit of preserving the tradition of the

Casa Panciu

56


vineyard, we produce a range of sparkling and frizzante wines.Because of the special characteristics of the soil, Crama Natura wines are snappy, slightly acidified. The first sparkling wine was produced here in the ‘70s. The grapes in this region have a natural acidity, and because of that our intervention in the manufacturing process of a high quality sparkling wine can be minimal.Our range of sparkling wines is now in a continuous development, out of respect for the values of these lands. For example, the sparkling brut wine Domeniile Panciu is obtained through the traditional Champions method, with fermentation in the bottle. Casa Panciu sparkling wines, white or pink, semi-dry or sweet, are produced by fermentation in tanks, through Charmat or Asti methods. In 2013, I decided to enter a new segment of sparkling beverages, and launched a range of frizzante wines. These are slightly fizzy wines, produced through fermentation in tanks, at a pressure of 2-2.5 bar. Panciu vineyard has a very rich tradition, and its history is entwined with that of Moldova. In holidays or after a hard day's work, teh cuines produced here were enjoyed by Moldavian princes and peasants alike.Wines produced and marketed under the brand Casa Panciu and Crama Natura were created in 2009. These wines have a minimum content of sulphites and the in wine cellar, people are working in conditions of maximum hygiene.The Nature Cellar portfolio covers the entire range of wines: white, pink and red, as well as sparkling wines traditionally produced, and frizzante wines, fermented in tanks. The winery has famous Romanian varieties of grapes, and renowned French varieties. Our

wine range for retail includes white wines, rosé and red, dry, semidry and semisweet, obtained from varieties such as Sauvignon Blanc, Muscat Otonel, Feteasca Alba, Feteasca Regala, Sarba, Babeasca Neagra si Feteasca Neagra.

PREMIUM WINESSagio represents the range of premium wines, a brand which promotes quality, obtained from a small production of selected grapes, harvested at full maturity, and only from excellent years.In 2013 we launched Casa Panciu HoReCa,

a range that includes dry wines, gourmet varieties, obtained from varieties of French origin such as Aligoté, Chardonnay, Muscat Ottonel, and from Romanian varieties such Feteasca Regala sau Feteasca Neagra. From the French red grape variety Cabernet Sauvignon, by extracting only the white wine sequence, we obtain a unique wine, black-hearted, but of white color.All investments in Tifesti were made with one goal: to obtain the best wines. We have some fantastic soil here. It would be a pity not to take advantage of it,

and not to struggle to maximize the potential of these vineyards. Every year, we entered the most important wine competitions, in order to test the quality of the our wines. We have already won a lot of prizes, but I cannot say I am satisfied. I know that always, no matter how well you do something, you can do it even better. This motto motivates me and challenges me to do my best. I brought a significant number of specialists to the winery, we have invested in the latest technology, we learn new things all the time, testing, experimenting, and growing. There is a lot of work to be done in the wine industry to achieve the full potential.

"We want to cooperate with other Romanian wine producers in an effort to regain the confidence in the Romanian wine, as well as to continue the centuries-old tradition of producing wine here, on Panciu hills."

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A great help in the revival of activity in Tifesti wine was the vine retraining program. Many vines were old, with limited productivity. Through this program we could replace large areas with young vines. On certain plots we planted fruit trees. I was totally captivated by this new field of activity. I studied a lot, I went to various vineyards from abroad, talked with experts, I even brought in Tifesti big names in this industry, in order to be able to produce wines of the best quality. This topic led me to want to learn more about the benefits of fruit in alimentation. I talked to many nutritionists and decided to do everything I can to promote natural and healthy food.The Nature company currently owns over 130 acres of vineyards and about 100 acres of orchard planted with apple, pear and cherry trees. I constantly invest in the land here. Only this year I planted about 20 acres of fruit trees.

NATURAL PRODUCTSWe sell fresh fruit, but at the same time, we process them and produce juices, jams and vinegars, all of them 100% natural, with no added sugar, water, additives or preservatives. With this in mind, we launched the brand ANA ARE (ANA HAS) in 2012, which promotes the consumption of healthy food and a balanced lifestyle. The brand name was chosen with the help of the Brandient creative team, led by Aneta Bogdan. This brand reminds people of their childhood, of basic things without which you can not accomplish anything; it brings a sense of purity and hope.For this range of products, we invested in a production line and in a storage capacity of 1,500 tons with a controlled atmosphere. In Bucharest, we have also invested in the construction of a warehouse, and we have build up a distribution network for these products. ANA ARE juices, jams and vinegars can be found in various stores, supermarkets and food groceries, in the Plafar retail chain, but can also be ordered online and delivered in Bucharest through the website www.direct-de-la-ferma.ro, or through www.casapanciu.ro for the rest of the country.

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INDUSTRY INSIGHTS / SPRING 2014 / BUSINESS ENVIRONMENT

AN ELITE CLUB OF THE BUSINESS COMMUNITYChambers of Commerce and Industry play an important role in supporting and promoting local companies. Among Romanian counties, Prahova is one of the most developed, the region being rich in natural resources such as: crude oil, natural gas, salt, coal, wood and limestone. Based on its most representative economic sectors, Prahova region is considered the county of “black gold” and the land of red wines. We have discussed with Mr. Aurelian Gogulescu, The President of Prahova County's Chamber of Commerce and Industry (CCI Ph) about the involvement of the organization he presides in the development of the county’s economy.

II: How many members does CCI Prahova have?

AG Prahova CCI has about 500 members. That may seem a small number

compared to the 21.500 companies registered in the county, but if we take into consideration the turnover of these companies, which, cumulated, represents about 60% of the revenue of all companies from Prahova County, we have a different image – it is obvious that the 500 companies which are already members of our CCI are the most important ones. And this number grows annually at a rate of 2-3%. We always try to offer quality services to our partners, thus retaining existing members and attracting new ones. Naturally, the relationship with the member companies is more direct and more active, and we are able to better support the companies whose activity we know. And this is the reason why we try to convince as many companies as possible to become members of Prahova CCI.

Which are the practical advantages of becoming a member of Prahova CCI?

First of all, I'd like to say that companies that join our CCI know that they join an elite club of Prahova County business community. But of course that, besides the status and image advantages of joining an organization determined to protect and to represent their interests, they do have practical benefits, like the possibility to access different services, such as: participation to training courses and seminars, attendance to fairs and exhibitions inland and abroad, issuing of Origin Certificates and other certifications, participation to business meetings, representation to the international events, rental of conference halls. We provide all these services to our members at discounted prices – so they can save up to 50%, depending on the amount of the membership fee.

Can you give us some more details about these services?

In fact, our entire range of services is addressed

CCI Prahova

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not only to members, but to the entire business community of Prahova County. We offer legal advice for companies' setting-up documents and operating licenses, business consultancy on different topics, provide business information from various fields, organize training courses, fairs and exhibitions, rent conference rooms etc. We issue various certifications and certificates – including those attesting the Romanian origin of goods for export. We facilitate, for Romanian companies, meetings with representatives of the foreign companies, as well as with the representatives of the Diplomatic Corps accredited in our country, and we also organize international seminars, symposiums and economic forums. Other promotional activities include: company presentations, conferences, seminars, work-shops, and the most important of all – “Prahova Business Awards Gala” annual event.CCI Ph runs different projects financed from European funds, as an applicant or partner,

and provides information and assistance to companies interested to access Government and European funds. We have a complex information and support platform, dedicated to local companies – our web page, the “Dynamic Business” magazine, the weekly newsletter, flyers, etc. CCI Ph organizes auctions for sales and purchases of products and services for private companies, public administration and state-owned companies through the Romanian Commodities Exchange – Prahova Terminal.

At which extent are the companies in the county interested to use the services

provided by CCI Ph? Over 600 people, representing companies from Prahova County, attended in 2013 at meetings with representatives of foreign companies and officials from 24 countries; representatives of 32 companies attended to business meeting abroad; about 100 exhibitors attended with own booths at local and national trade fairs and exhibitions;

Mr. Aurelian Gogulescu, President of Prahova Chamber of Commerce and Industry

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23 companies attended, through CCI Ph, at international trade fairs; over 600 representatives of the local business community attended our seminars, conferences and work-shops and 525 people completed different training courses organized by CCI Ph.Along with these activities, we provided free professional training courses to 500 participants, through projects financed with EU funds and undertaken by Prahova CCI. Over 430 members of the business community and members of local and central public administration, diplomatic environment and banking system attended the “Prahova Business Awards Gala” annual event in 2013.

Which are the trade fairs and exhibitions organized by CCI Ph?

CCI Ph has a long and rich tradition in organizing trade fairs and exhibitions. The most successful was Prahova Industrial Fair, from which emerged two exhibitions – Prahova Construct Ambient (constructions) and Salonul Auto (automotive); Expo-Petro-Gas (initiated and organized by CCI Ph in Bucharest, in partnership with Romexpo) was a prestigious international event until 2009, when Romexpo decided to end this cooperation. Unfortunately, in Ploiesti does not exist an exhibition complex, but this will change soon enough, because Prahova County Council has already started to build an exhibition space inside a large industrial park in the vicinity of Ploiesti. We intend to organize an international exhibition in Ploiesti for companies acting in the oil and gas industries.

How do you assist the Romanian companies willing to attend international

fairs and exhibitions from abroad? In these years, when financial issues play an important role in a company's decision to participate at an exhibition abroad, companies prefer to attend the events for which Romanian Government provide free participation inside the national stand. In addition, the Government

ensures the settlement of 50% of the accommodation and travel expenses for one representative of each company. CCI Ph supports the participation of companies from Prahova County by providing

necessary information and by helping the companies to fill the application documentation.But, in addition to these events, during the last 4-5 years, through our excellent relations with the foreign embassies in Romania, we were able to offer to several companies the opportunity to attend fairs and exhibitions in Greece, Spain, Turkey, Taiwan, Argentina, granting them important facilities – free air transportation, accommodation, transfers.

What sets apart and confers specificity to CCI Ph comparing to other chambers

of commerce in Romania?The answer may vary depending on the perspective from which we look at things. But if we continue to focus on the services which CCI Ph provides to the business community, I think the element that clearly differentiate us from other Romanian chambers of commerce (and I'm not referring only to the territorial ones) is the level at which CCI Ph developed the foreign business relations and international economic cooperation. Our success is based on our special relationships with the representatives of the Diplomatic Corps accredited in Romania, but also with the representatives of the Romanian diplomacy abroad. Speaking of partners, I have to underline that the CCI Ph currently has 60 cooperation agreements with Chambers of Commerce and Industry from abroad, with counterpart organizations and professional associations from 29 countries.Many of our international business events benefit from our special relations with our partners from foreign embassies in Romania, and from the Romanian embassies abroad; our colleagues from other chambers of commerce and industry and from other institutions and economic organizations in the country and abroad also support those business events. I am proud to say that the presence of so many high

Cumulated turnover of the CCI Prahova members represents

60%of total revenue of all companies

from Prahova County.

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profile foreign guests was a strong signal for many foreign investors, which decided, based on these signals, to choose our county for major investment projects.The development of our international cooperation with certain partners has reached a level that allowed us to open representative offices of CCI Ph abroad – in Shanghai - China and in Moscow- Russian Federation.But before the opening of these two offices – the representative office in Shanghai was established in February 2001, and the one in Moscow in October 2011 – in November 2009 was opened in Ploiesti, at CCI Ph headquarters, with the support of the Embassy of the Republic of Macedonia in Romania and of the Romanian authorities, the Honorary Consulate of the Republic of Macedonia, whose Honorary Consul I had the honour to be appointed. So our relationship with the Republic of Macedonia is also a special one, and we don't miss any

opportunity to promote bilateral partnerships, Macedonian investment environment being one of the friendliest in the world.We also have outstanding relationships with our Italian partners – from Abruzzo (Pescara), Basilicata (Potenza), Milan, Brescia, Bari, and Sicily – to which we have developed, over the years, many partnerships with excellent impact over the business communities from Prahova County and these Italian regions.Our relations with Moldova, Hungary and Bulgaria also worth being mentioned , the dialogue with our economic and institutional partners from these countries – the counterpart Chambers of Commerce and Industry from the respective countries and their Embassies in Bucharest – being particularly active.But our Chamber of Commerce and Industry it's been recognized as a valuable partner by many other countries, including EU members, US, Canada, South Africa, countries from

“The role of CCI Ph is to represent and promote the businesses in Prahova County, to contribute to the development of local economy,” says Mr. Aurelian Gogulescu. “CCI Ph plays an important role in promoting exports of companies in Prahova, on one hand, and to attract foreign investments in the County, on the other hand,” adds Mr. Gogulescu.

Inauguration of Europe Direct Center at CCI Ph Headquarters, in the presence of H.E. Mr. Oliver Grogan, Ambassador of Ireland in Romania. Ploiesti, February 27th, 2013

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Middle East, Africa and Latin America, whose diplomatic and commercial representatives in Romania are interested in developing and strengthening relations with Prahova County.I've mentioned this information because it represents specific elements of CCI Prahova, quite unique in the Romanian system of Chambers of Commerce and Industry. We are the only Romanian Chamber of Commerce which has such a triplet of international representation – two representative offices abroad and a diplomatic mission at its headquarters, the President of the Chamber being at the same time Honorary Consul. These are powerful promotional tools for the companies from Prahova County and for the Romanian economy.

What did you aim to achieve with the two representative offices from abroad?

How are they assisting the business community of Prahova County?Basically, the two offices were established as a result of the requests we've received from our partners in China and Russian Federation, both

of them having a very high potential in terms of economic and trade cooperation with Romania. Our goal was to stimulate the export in those countries, on one hand, and to attract Russian and Chinese investments in Romania, on the other hand.The main achievements of the CCI Prahova Representative office in Shanghai are: participation of Romanian companies in 11 exhibitions in Shanghai, promotion of Romanian trade fairs, the establishment of a Romanian-Chinese wine producing joint-venture company in Harbin and we succeeded in attracting some Chinese investors in Prahova County – they invested in the production of printing equipment and in real estate projects. New contracts were signed between Romanian and Chinese companies in various fields, such as packaging industry, chemical industry, production of industrial equipment and renewable energy.The activity of our representative office in Moscow takes place through a cooperation with Russian-Balkan Information-Economic Agency.

Mr. Aurelian Gogulescu, President of Prahova Chamber of Commerce and Industry and Mr. Ma Xingli - Chairman of China Council for the Promotion of International Trade, Heilongjiang Sub-Council, official meeting in Harbin, China, June

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The exchange of commercial information and business contacts is done through the International Trade-information Portal, a shared space used by companies operating in Russia, Romania and in other countries from the Balkan peninsula.

How do you assist the companies from Prahova County to obtain European

funds and which are your most notable successes?CCI Ph has been involved in the implementation of projects financed from European funds both as beneficiary or co-beneficiary, but also as adviser for companies on internal and external funding sources, funding institutions, credit conditions and grants; CCI Ph offered assistance in the preparation of studies, business plans and projects for financing.At the same time, funds obtained through the projects we've carried out were used to support several activities conducted by CCI Ph in the benefit of the business community – for the companies, but also for the individuals searching for a job, or in need of professional retraining. In the past 3-4 years, we were particularly active, implementing many European projects. Thus, in 2013 were 13 active projects, out of which 11 strategic ones, while a year earlier, in 2012, we had 16 projects underway.Among the specific services provided free of charge for the projects' target groups (unemployed persons, managers, entrepreneurs), there are: consulting services, vocational counseling and training courses for occupations in demand on the labor market – cook, waiter, baker, tourism workers (maid, technician, pension manager etc.); we organized different courses, such us training in entrepreneurship, foreign languages, IT, sales manager, environmental management systems, decision-making, team management etc. I would also mention: the establishment of a Centre for Mediation and vocational counseling; setting up a Centre for assessment of professional competence; we organized job fairs and job-clubs, conferences and seminars.From the multitude of projects we've carried out, I would highlight two that were both complex and innovative.“Regions for Jobs” was a difficult professional retraining project, implying numerous activities and events, but it was a project with very good results, as many of the participants either found a new job or started their own business, as a

result of participating in this project.The other project that I want to mention was a special one – representatives of Romanian Chambers of Commerce were both those who implemented and carried out the project and members of the target group. This project, called SIAS – Innovative Scheme of Versatility and Specialization, implied the establishment of the “chambers' consultant” occupation and the training of the employees for the new occupation. For all the Chambers of Commerce involved in this project – including, of course, CCI Ph - the results were outstanding.Along with these important projects, that were completed in the meantime, CCI Prahova runs, since January 2013, a project funded by the European Commission – EUROPE DIRECT Center, Ploiesti (2013-2017).Through this Centre, we inform European citizens about the European Union, especially about their rights and about the EU's priorities (in particular the “Europe 2020” strategy for economic growth) and we promote participatory citizenship at local and regional level. These actions have a wide target audience, being directed not only towards the members of the business community, but also towards all categories of citizens, regardless of age, gender and occupation; therefore, with each of this numerous events, addressing various topics, our organization is becoming increasingly popular, closer to the whole community of the city and County – a fact that can only satisfy us, giving us confidence that we do right and useful things for the local business community.

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Industry Insights - spring 2014