Is Prvi Maj sold or given as present to Mura?

A well-known practice of potentates to answer even a simple question by issuing a statement is as old as the profession of journalism. However, there are some statements to which it is hard to stay indifferent.

Several Belgrade newspapers have recently started writing about the privatization of Prvi Maj. The English-Slovenian company AHA Mura bought three production facilities of the Pirot-based company for EUR 2.1 million and promised to hire 1,328 workers and later invest EUR 11 million in that textile company. In return, the state granted EUR 5,000 to AHA Mura for each newly employed worker. Newly employed?

Milan Knezevic, owner of the fashion company Modus and the vice president of the Serbian Association of Small and Medium-Sized Enterprises, presented a very interesting calculation by the government in an open letter to the media.

At the time of the signing of the sales agreement, 1,350 out of the total of 1,500 employees of Prvi Maj were working at three production facilities sold to AHA Mura. Mojca Lukancic, co-owner of AHA Mura, stated that 1,100 textile workers would be hired by the year's end, adding that jobs would be first offered to already employed production workers. That means that the state gave a total of EUR 6.75 million for the "newly employed" workers who were already employed. After AHA Mura paid EUR 2.1 million for aforementioned production facilities, it was left with EUR 4.65 million.

This curiosity, in the country that is famous for its proficiency in the privatization process even in Brussels, can be explained in several ways, and we are all interested in finding out what the real explanation is. First - the state simply bought Prvi Maj and gave it as a present to Mura. Second - the state bought Prvi Maj and gave it as a present to Mura, but for a good reason. Third - our calculations somehow do not match.

This is that very simple question asked by journalists. And here is a quite unusual answer by the Ministry of Finance:

- AHA Mura was the only bidder at the public auction, and it bought part of the textile plant for EUR 2.1 million, with the obligation to hire 1,328 workers and give priority in hiring to those who were employed at that production unit at the moment of the signing of the sales agreement. AHA Mura plans to invest a total of EUR 11 million in Pirot, which includes the acquisition of a part of the immovable property of Prvi Maj, investment in the reconstruction of facilities and the installation and procurement of new production equipment - said people from the Ministry of Finance, who also stressed that the buyer was obligated to submit a first-class bank guarantee for the total amount of employment incentives.

We all know that AHA Mura was the sole bidder, that it offered the price of EUR 2.1 million, that it promised to hire 1,328 workers, that it plans to invest a total of EUR 11 million... However, that was not the question.

This story definitely does not have only one side because it is clear to anybody who has at least passed by the window of a Prvi Maj store that jackets and skirts from the socialist era and outdated designs, which are so out of fashion that nobody even remembers when they were in trend, almost do not stand a chance of surviving in the market. And although people at Prvi Maj say that the jobs they do for foreign companies keep the situation more or less under control, the figures do not lie. Losses are being piled up. Some people say - the state bought Prvi Maj in order to save it from bankruptcy and its workers from getting fired.

How the things are going for Mura

In the meantime, we've wondered how Mura operates under the new owner. The Slovenian textile company became a part of the AHA Group, which is owned by Mojca Lukancic and her husband Nigel Buxton, in mid-2011. To be more precise, AHA Moda acquired Mura's bankruptcy estate in August 2011. For the revitalization of the trademark Mura, the Slovenian government granted EUR 5.815 million to that company.

According to the financial reports submitted to eKapija by the consulting company Coface Slovenia, AHA Moda reported the net loss of about EUR 328,000 in 2011, over EUR 258,000 of which were business losses.

The company's total revenue in 2011 amounted to EUR 2,652,968. The value of fixed assets has been increased by EUR 17,972,062, and these assets now account for 83.49 percent of total assets. The number of workers grew from 720 to 920 in 2012.

The financial indicators of liquidity of the AHA Group are not on a satisfiying level, and what is particularly worrying is its indebtedness, that is, the ratio of long-term liabilities to working capital. The company has a substantial credit risk. In 2011, its profit was at EUR 138,108, whereas the total revenue amounted to EUR 1,174,075.

If it just operated as it should

The factory in Pirot was first privatized in 2007, when local businessman Djordjije Nicovic bought it for EUR 1.75 million. The Privatization Agency terminated that sales agreement in 2010 because the buyer failed to meet his obligation to invest a total of EUR 4 million within the agreed period of time.

Anyway, the new owner is now on the move. The easiest way to stop all the fuss will be to do the right thing with the factory, regardless of whether or not it was given as a present. People of Pirot are now waiting. We wish them not to have the same destiny as some other workers in Serbia.

If Mura turns out to be a good owner, if it makes profit and let them earn money, they will be forgiven everything.

Milica Stevuljevic