"In order to develop the company, we must export. And in order to export, we must find partners abroad. We cannot be introspective."
Jaromír Pavlák, Marketing Manager, Chirana Prema
Chirana Prema, a.s., a holding company specializing in precision technology, is one firm that has adapted to changing times and markets.
Located in the west Slovak town of Stará Turá, Chirana Prema is a major supplier of medical equipment and measuring devices in Slovakia and on neighboring markets.
It wasn't always that way. The firm started off as a small subsidiary for gas meter production founded by a Czech industrialist in 1935. During World War II, the company was producing ammunition, but that venture ended when the plant was partly destroyed by the retreating Germans. Afterwards, production concentrated on production of precision technology, and Chirana Prema has since evolved into providing medical equipment and measuring devices.
Today, Chirana Prema's production line includes disposable needles and syringes, dental equipment and instruments (such as dental drills), X-ray machines, anathesiology apparatuses and medical electronics. Various industrial and household measuring devices include water, heat and gas meters and pressure gauges. In all, the company has 9 manufacturing divisions, and several daughter and affiliate companies. The latter category includes Chirana Export-Import, the biggest Slovak importer of medical equipment.
Total revenue for 1995 amounted to 2.716 billion Sk, with a pre-tax profit of 62 million Sk. "In 1996 we managed to increase profit by roughly 12.6 percent," said Jaromír Pavlák, Chirana's marketing director, "and we expect the same rate of growth for next year. This will be due to streamlined production and distribution system, but on the other hand we also expect a significant increase of supplies to central and eastern European markets."
Chirana Prema kicked off its production of disposable syringes in the 1970s, mostly relying on imported technology. Ironically, due to a lack of interest from domestic customers, the company was forced to place its products on Western markets, thus allowing it to repay the hard currency loan it needed to start its production in a mere three years.
Today, with 85 percent of its production being exported, the company's continuing development depends on its ability to penetrate new markets, Pavlák said. "We have been systematically preparing to export to China, Vietnam and India," Pavlák said. "And once the war is finished in the Balkans and the situation there stabilizes, we expect to enter those markets, too. These countries have high demographic potential, while the health care system is in need of medical equipment."
One measure of a Slovak company's competitiveness is its exports to EU countries. Concerning disposable syringes and needles, Chirana is one of the four biggest suppliers to the German market, Pavlák said, adding that a significant part of the firm's production also goes to Benelux countries and to France. "On these markets we cooperate with the Japanese syringe producer Tekumo," Pavlák said. On the whole, exports to the EU constitute 8 percent of Chirana's total sales.
Important markets for disposable syringes and needles (85 percent of total production is exported) also include the Czech Republic, Ukraine, Russia, Lithuania, Uzbekistan and Romania. Other products are also heavily exported, namely dental equipment (84.7 percent of total production is exported), and gas and water meters from Premagas, an affiliate company, with 84.9 percent of total production reaching customers abroad.
Martin Barto, an analyst with ING Barings in Bratislava, agreed that central and eastern European markets have significant high-growth potential. Chirana's main competitors on Western markets in syringe technology, Barto noted, are companies such as the American Becton and Dickenson, B Brown of Germany, or Tekumo. But he said that Chirana is not only strong on the Slovak market, but in central and easterm European countries as well.
In the past year, Chirana has significantly diversified its activities, raising a few eyebrows with its purchase of a 23 percent stake in Slovenské Lodenice (Slovak Shipbuilding Company). This deal occurred after shifts in ownership in Chirana itself when, in April '96, two unknown companies, Slovenská Kapitálová Spoločnosť and Brema each bought an 11.6 percent stake. At the same time, a 10 percent slice was also bought by Slovenská Kreditná Banka (Slovak Credit Bank), which later acquired a 10 percent stake in Slovenské Lodenice.
A significant strain in the company's strategy is cooperation with foreign partners. Chirana has affliate companies in the Czech Republic, Germany, Poland and Hungary, Pavlák said. In water meter technology it cooperates with two German firms, Spanner-Pollux, and Meinecke; in gas meters, the main partner is ELSTER Group, Germany; and in medical technology, the firm works with two Finnish firms, Fimet and Datex. "In order to develop the company, we must export," Pavlák said. "And in order to export, we must find partners abroad. We cannot be introspective."
Chirana Prema At a Glance (1995 figures)
Total revenue: 1.775 billion Sk
Gross profit: 95.4 million Sk
Net profit: 5.2 million Sk
Total assets: 3.889 billion Sk
Share capital (as of 04.97): SE 1.03 billion
No. of subsidiaries: N/A
Ownership shares(as of 04.97): Slov. Kap. a Konz. Spol. - 17.4%, Cent. Eur. Growth - 13.43%, Brema sro - 11.6%; Slov. Kred. Bnk. - 9.79, Prvá Kom. Bnk. - 5.8; VÚB - 5.57, Komerční Bnk. Brat. - 2.88
