Business news

27 Feb 2019

Kamvol signs supply contract with Ukraine, eyes EU market

MINSK, 27 February (BelTA) – OAO Kamvol has signed a $5 million supply contract with Ukraine’s Altex, Director General of OAO Kamvol Anatoly Subbotko said at a board meeting of Bellegprom Concern on 27 February, BelTA has learned.

The operation of OAO Kamvol was in the focus of attention during the meeting. Belarus' Vice Premier Igor Lyashenko paid close attention to the financial performance of the company. He made a number of comments on the management of the enterprise and criticized some management decisions. In particular, Kamvol increased the production of fabric through withdrawing significant funds from the working capital. The products were not sold, the funds were “frozen”, and the backlog of inventory increased. “What has changed in the company’s foreign economic relations? What is being done to untie this knot,” Igor Lyashenko wondered.

According to Anatoly Subbotko, the company is working hard to find a way out of the complicated economic situation. A new business plan which was coordinated with Bellegprom Concern was adopted in February 2019.

According to the director general, not long ago the company signed a $5 million supply contract with Ukraine’s Altex. “The company has already received the advanced payment and launched the implementation of the order,” Anatoly Subbotko said. He hopes that cooperation with the Ukrainian company will open access to the EU market for the Belarusian producer: “Ukraine is an opportunity to enter the European market. The company we have signed the contract with receives orders to produce ready-made garments for the European Union.”

The contract with Altex has been signed with the assistance of Kamvol’s new Ukrainian agent. Anatoly Subbotko stressed that the cooperation with the intermediary holds great promise and the company hopes it will help find more customers in Ukraine.

The deficit of the working capital is the most pressing problem for Kamvol today. The company needs to urgently reduce the warehouse stocks and return the overdue receivables (approximately $3.7 million). The company now works on a prepaid basis only. Kamvol has received a bank guarantee for €400,000 from Belarusbank for procurement of wool.

“In 2018 the warehouse stocks increased by 270,000 running meters of fabrics,” Anatoly Subbotko informed. He explained that 200,000 of them were manufactured under a contract with a Turkish firm which, unfortunately, failed to fulfill its obligations. “This is a fabric for civilian purposes. It sells out but slowly. It is an expensive fabric, wool and wool mixture,” Anatoly Subbotko said.