Paneuro Group, which deals in car parts, IT and the sale of cars and motorcycles, has decided to reorganise its operations by profit centres, after having massively expanded over the last few years and finding it was no longer able to sustain such investments.
Moreover, the excessive investments have driven Paneuro Trading, the group's largest company, which specialises in the import and distribution of car parts, to the point where it is preparing for the initiation of receivership procedures.
"A series of steps have been taken and I believe Paneuro Trading will file for receivership at the end of the month," Claudia Badiu, a member of the Paneuro Board told Ziarul Financiar.
How did the Paneuro Group's largest company end up having to file for receivership in the first place?
"It was actually due to a number of factors. One of these was the relocation of the Paneuro Trading headquarters from Targu Mures to Bucharest in 2002. This was followed by very large, oversized investments that failed to materialise in the company's results," the Paneuro official added.
Paneuro Trading rented more than 570 sqm in the Grand Offices complex operating inside the Marriott Hotel in March 2002, later expanding to occupy a total of 1,300 sqm during the autumn of the same year. Back then, Class A office space would let for $20-$22/sqm/month.
"The relocation to Bucharest allowed for an image and brand-awareness gain. On the other hand, control over operations worsened. The expenses entailed by the relocation to Bucharest; the acquisition of the Mogosoaia base; the purchase of vehicles, mobile phones, computers, furniture; the hiring of people lacking an organisational culture; and the opening of a Piaggio showroom close to the Unirea shopping centre in downtown Bucharest - all of these were oversized. Furthermore, in order to support the operations of the Paneuro dealers, the company allowed for extended payment periods, which were longer than one year in some cases. It also allowed very large stocks," Badiu explained. Under the circumstances, the company's debts piled up, doubling between 2000 and 2002 to over $18.6 million, according to the data available on the Finance Ministry's website. Turnover in the same period went up 70% to nearly $19.9 million, while net profit rose a mere 15% to $170,000. Some of the companies from the group have been, or could be, sold. "We have developed a large number of businesses in various sectors, which when reaching maturity, considering the opportunities on the market, can be sold. That is, as long as their sale allows concentrating financial and strategic efforts in the direction chosen by the shareholder. In our specific case, we can concentrate our efforts towards those businesses that generate higher added value," Badiu said.
ionut.bonoiu@zf.ro
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