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GAGIK MKRTCHYAN: OUR COUNTRY NOT ONLY CAN BUT ALSO SHOULD DEVELOP INDUSTRIAL PRODUCTION
ELBAT CJSC, an Armenian-German JV, one of the leading manufacturers
in Western Asia producing a full range of high quality SLI lead-acid
batteries, was launched in November 2010. Over four years of activity,
the company has increased the output and expanded the sales geography.
In his interview with ArmInfo News Agency, Gagik Lazarian, Chief
Commercial Officer, member of the Board of Directors of Elbat CJSC,
says how the company manages to sustain competition on the domestic
and foreign market given the unstable economic situation and the
Armenian dram depreciation and what measures the company takes to
enhance its competitiveness.
by Arthur Yernjakyan
Tuesday, March 3, 15:52
Our new project we are intensively working at is construction of a
shop for processing waste batteries. It would be good to launch that
project in April. We know the amount of investments and the funding
sources and we also preliminarily know our possible partners and
contractors. We have not yet taken any decisions on the equipment
suppliers, however, we are conducting the relevant surveys. We are
going to hold a tender on equipment delivery and involve the most
advanced companies - Italian, French, U.S., Russian ones - to find
the best price/quality ratio. We have an interesting statistics on
lead extraction and processing. The more developed the state is,
the more lead is processed in it. For instance, in the United States
the lead processing is 4 times as much as the extraction.
Mr. Lazarian, I would like you tell me about the two most important
aspects of the project, particularly, the economic benefit and the
environmental component.
The on-site lead processing will allow reducing the prime cost of
battery production by 15-20%. What is a battery? Actually, it is the
lead in polypropylene covered with sulfuric acid. It is the lead that
makes up the major part of the battery value.
In the meantime, it is one of the rare cases when economic interests
coincide with environmental ones. Suppose, 1 thsd tons of sulfuric
acid mixed with lead dioxide is annually emitted into the environment.
I do not know what happens to the waste lead. I think it is
exported, but without sulfuric acid, which sinks in the soil,
penetrates into the ground water and inflicts tangible damage to
our country's ecology. Just imagine that the vegetables and fruit
we eat might be watered with the water that contains lead oxide,
which is poison. I have surveyed the market and found out that
Armenia lacks companies licensed to process lead. At the moment,
we are trying to get a permit for processing dangerous substances,
their assembly and transportation. This is a complicated license that
lays down complicated demands.
I should say that all our key competitors engaged in battery production
also process the products. Actually, processing should be followed
by production. We experience the opposite situation and now we are
correcting that situation.
Will the locally processed lead have better quality than the lead
imported by Elbat?
When you have your own production, you obtain much better lead than
when you import it. Following the processing, the lead quality is
higher because after the refinement you bring it in compliance with the
required quality standards. Suppose, we buy the lead from Russia and
Italy and it has some deviations from the necessary parameters. As a
rule, we do not return the lead to the supplier, because it is rather
disadvantageous in terms of transport costs and in that case the only
thing one can do is reduce the delivery price. The local processing
primarily guarantees high quality. The keystone of the battery is
the lead.
By the way, when you buy a new battery, the sellers ask you to give
the old one. What do they take it for?
Unfortunately or fortunately, I do not know how the waste batteries
are used now. I suppose they are exported, because no one processes
them in Armenia and no one needs them here. But I should say that
when being exported the sulfuric acid penetrates into the environment.
The idea to use the waste is nothing new in Armenia, and it is already
being practiced at a fittings plant, for instance. Are there enough
waste batteries in the republic for your production?
Of course, there are not. We are taking measures to acquire old
batteries from the neighboring countries, e.g. from Georgia. There are
several such processing plants there but they have low capacities. In
addition, we sell our batteries in Georgia; therefore it will be
easier for us to assemble the waste batteries. We are going to import
from Georgia around 1 thsd tons of lead per annum. According to our
arrangement, we are going to receive old batteries in exchange for
the newly supplied ones. The transportation costs are somewhat higher
but the game is worth the candle.
How much does the project cost?
The cost of the project ranges from 3.2 mln to 4.5 mln EUR, VAT
exclusive. These are simply capital investments. The payback period
may range from 2.5 to 3 years.
Who is the investor? Will it be private funds of the shareholders or
borrowed ones?
I think, it will be borrowed funds.
When do you plan to launch the construction of the processing shop?
We look forward to launching the construction in June of the current
year. We will produce lead, at least, in a year.
Do you plan to open more workplaces?
Sure, we will. However, the processing is automated and we need a
limited number of workplaces. I think, together with the administrative
staff, we will have up to 20 new workplaces.
As for the lead processing, will it have any negative impact on
the environment?
We pay a high attention to the environment. As many as 1.5 million EUR
of the total investments will be spent on purchase of special filters.
I assure you, it will be pure production without any health impact.
Construction of the battery factory in Yerevan was quite a risky
undertaking given the stiff competition with importers. Don't you
think that you have proved to many in our country that industrial
production development is possible in Armenia?
We have already proved that in our country it is possible and necessary
to develop industrial production. Inherently, we are producing a
very important, if not strategic, product. The company is on the
verge of broad changes. You will see, our cars will be replaced with
electro-mobiles in the not so distant future, and then we will need
to produce batteries of new generation. We are thinking ahead.
http://www.arminfo.am/index.cfm?objectid=36F4FCE0-C1A4-11E4-9B9F0EB7C0D21663
ELBAT CJSC, an Armenian-German JV, one of the leading manufacturers
in Western Asia producing a full range of high quality SLI lead-acid
batteries, was launched in November 2010. Over four years of activity,
the company has increased the output and expanded the sales geography.
In his interview with ArmInfo News Agency, Gagik Lazarian, Chief
Commercial Officer, member of the Board of Directors of Elbat CJSC,
says how the company manages to sustain competition on the domestic
and foreign market given the unstable economic situation and the
Armenian dram depreciation and what measures the company takes to
enhance its competitiveness.
by Arthur Yernjakyan
Tuesday, March 3, 15:52
Our new project we are intensively working at is construction of a
shop for processing waste batteries. It would be good to launch that
project in April. We know the amount of investments and the funding
sources and we also preliminarily know our possible partners and
contractors. We have not yet taken any decisions on the equipment
suppliers, however, we are conducting the relevant surveys. We are
going to hold a tender on equipment delivery and involve the most
advanced companies - Italian, French, U.S., Russian ones - to find
the best price/quality ratio. We have an interesting statistics on
lead extraction and processing. The more developed the state is,
the more lead is processed in it. For instance, in the United States
the lead processing is 4 times as much as the extraction.
Mr. Lazarian, I would like you tell me about the two most important
aspects of the project, particularly, the economic benefit and the
environmental component.
The on-site lead processing will allow reducing the prime cost of
battery production by 15-20%. What is a battery? Actually, it is the
lead in polypropylene covered with sulfuric acid. It is the lead that
makes up the major part of the battery value.
In the meantime, it is one of the rare cases when economic interests
coincide with environmental ones. Suppose, 1 thsd tons of sulfuric
acid mixed with lead dioxide is annually emitted into the environment.
I do not know what happens to the waste lead. I think it is
exported, but without sulfuric acid, which sinks in the soil,
penetrates into the ground water and inflicts tangible damage to
our country's ecology. Just imagine that the vegetables and fruit
we eat might be watered with the water that contains lead oxide,
which is poison. I have surveyed the market and found out that
Armenia lacks companies licensed to process lead. At the moment,
we are trying to get a permit for processing dangerous substances,
their assembly and transportation. This is a complicated license that
lays down complicated demands.
I should say that all our key competitors engaged in battery production
also process the products. Actually, processing should be followed
by production. We experience the opposite situation and now we are
correcting that situation.
Will the locally processed lead have better quality than the lead
imported by Elbat?
When you have your own production, you obtain much better lead than
when you import it. Following the processing, the lead quality is
higher because after the refinement you bring it in compliance with the
required quality standards. Suppose, we buy the lead from Russia and
Italy and it has some deviations from the necessary parameters. As a
rule, we do not return the lead to the supplier, because it is rather
disadvantageous in terms of transport costs and in that case the only
thing one can do is reduce the delivery price. The local processing
primarily guarantees high quality. The keystone of the battery is
the lead.
By the way, when you buy a new battery, the sellers ask you to give
the old one. What do they take it for?
Unfortunately or fortunately, I do not know how the waste batteries
are used now. I suppose they are exported, because no one processes
them in Armenia and no one needs them here. But I should say that
when being exported the sulfuric acid penetrates into the environment.
The idea to use the waste is nothing new in Armenia, and it is already
being practiced at a fittings plant, for instance. Are there enough
waste batteries in the republic for your production?
Of course, there are not. We are taking measures to acquire old
batteries from the neighboring countries, e.g. from Georgia. There are
several such processing plants there but they have low capacities. In
addition, we sell our batteries in Georgia; therefore it will be
easier for us to assemble the waste batteries. We are going to import
from Georgia around 1 thsd tons of lead per annum. According to our
arrangement, we are going to receive old batteries in exchange for
the newly supplied ones. The transportation costs are somewhat higher
but the game is worth the candle.
How much does the project cost?
The cost of the project ranges from 3.2 mln to 4.5 mln EUR, VAT
exclusive. These are simply capital investments. The payback period
may range from 2.5 to 3 years.
Who is the investor? Will it be private funds of the shareholders or
borrowed ones?
I think, it will be borrowed funds.
When do you plan to launch the construction of the processing shop?
We look forward to launching the construction in June of the current
year. We will produce lead, at least, in a year.
Do you plan to open more workplaces?
Sure, we will. However, the processing is automated and we need a
limited number of workplaces. I think, together with the administrative
staff, we will have up to 20 new workplaces.
As for the lead processing, will it have any negative impact on
the environment?
We pay a high attention to the environment. As many as 1.5 million EUR
of the total investments will be spent on purchase of special filters.
I assure you, it will be pure production without any health impact.
Construction of the battery factory in Yerevan was quite a risky
undertaking given the stiff competition with importers. Don't you
think that you have proved to many in our country that industrial
production development is possible in Armenia?
We have already proved that in our country it is possible and necessary
to develop industrial production. Inherently, we are producing a
very important, if not strategic, product. The company is on the
verge of broad changes. You will see, our cars will be replaced with
electro-mobiles in the not so distant future, and then we will need
to produce batteries of new generation. We are thinking ahead.
http://www.arminfo.am/index.cfm?objectid=36F4FCE0-C1A4-11E4-9B9F0EB7C0D21663