VILNIUS - Snaige, the largest manufacturer of refrigerators in the Baltics, launched its new plant in the Kaliningrad exclave last week in a bid to win a sizable portion of the lucrative Russian market.
The 13.6 million euro, 18,000- square-meter plant, located in the city of Kaliningrad, took almost a year to build and has an annual production capacity of 350,000 refrigerators.
Speaking at the ribbon-cutting ceremony, CEO Romualdas Raudonis said that the company expected to sell around 1,000 units in March and some 150,000 in 2004. He also said the company planned to post some $40 million in revenues from Kaliningrad operations by the end of the calendar year.
Due to its unique geographical position, the Kaliningrad region enjoys significant tax benefits - e.g., a huge reduction in VAT for manufacturers - thanks to the establishment of a free economic zone in 1996. Thus by producing its refrigerators in Kaliningrad, Snaige can export to the Russian market at approximately a 20 percent discount than if it were to ship units straight from its plant in Alytus in southern Lithuania.
The plant will provide jobs for about 400 Kalinigraders, and top Snaige specialists are currently in Kaliningrad training the new employees.
Raudonis said that although the new facility would focus on refrigerators for the Russian market, plant output was likely to be exported to Ukraine, where Snaige holds a 35 percent market share. In the future, deliveries to EU countries were also possible.
"Our technology is much more different than what we used 40 years ago," Raudonis said in Kaliningrad, referring to Snaige's establishment in 1963. "More than 70 percent of our output is exported, so we adhere to all European standards."
What's more, the CEO said that the company was in talks with a major foreign company over joint production of refrigerators in Kaliningrad. If a deal is reached, the plant's production capacity could reach half a million units per annum.
Snaige's refrigerator plant in Lithuania has an annual production capacity of over 450,000 units.
As it is, the new plant will provide some 480 million rubles (14 million euros) in tax revenues for the local economy, Raudonis said.
Vilniaus Bankas, Lithuania's largest bank in terms of assets, said it issued an 18 million litas (5.2 million euros) loan to help finance construction of the plant, while the Vilnius branch of Germany's Vereins-und Westbank provided another 5 million litas.
Snaige carried out its investments in the exclave through Techprominvest, a company in which it owns 85 percent of capital stock.
Snaige posted 2003 earnings of 24.7 million litas on sales of 278.4 million litas, according to the company's nonconsolidated financial statements.
Snavesta, a Lithuanian firm managed by the Hermis Fondu Valdymas investment group, controls around 38 percent of Snaige's stock.
