The FINANCIAL — Wissol, one of the largest business groups in Georgia, plans to make solid investments in different operating fields and develop dynamically in 2011 according to Mr. Soso Pkhakadze, Chairman of the Wissol Board of Directors.
The first quarter company results are positive, and as Mr. Pkhakadze said, increased sales have been observed in different businesses of Wissol Group. “We have had an increase in sales in the first quarter of 2011. The dynamics of 2010 that we had at Wissol Petroleum are continuing. As for other companies incorporated in Wissol Group, we have observed significant improvements which mean that the country is recovering from the economic downturn. We are in the post crisis period and economy is picking up rapidly,” Mr. Pkhakadze added.
Wissol is one of the largest business groups in Georgia incorporating Wissol Petroleum, Wissol Gas, Air Wissol, Wissol Gas Distribution Company, construction company JSC Delta and advertising company Vellagio. Recently the company added Auto Express and through business diversification has started developing a supermarket chain under the name Smart as well. `It’s our intention to create a nation-wide chain of modern supermarkets that will meet expectations of wider pubic,” said Mr. Pkhakadze who currently serves as a General Director of JSC Smart Retail.
Wissol will face several challenges in 2011. “Firstly, we would like to sustain our leading position on the market. The market leaders have even greater responsibility to conduct businesses adhering with the most modern business ethics and practices. Being leader means constant control of product and service quality, being always an innovator, constantly implementing new innovative projects which make your clients highly satisfied and provide additional value to them. This is why Wissol is distinguished on the marketplace and customer care gives us the basis for our success,” Mr. Pkhakadze added.
The company will be investing millions of GEL in core business developments in 2011.
Auto Express, new venture with exclusive rights from Total, works in three directions: development of oil and lubricant change boxes located near Wissol petrol stations; tier service as well as transformation of cars on natural gas.
Wissol is the exclusive importer of oil lubricants of French company Total, one of the world’s major oil and gas groups.
Total lubricants will be available in 15 locations throughout Georgia by the end of 2011. The company plans to make over 50 units in the country. The lubricant service points will be available near Wissol petrol stations throughout Georgia.
The first Smart supermarket was opened in December 2010. Within 2-3 years the Smart supermarket chain will launch over 20 supermarkets throughout Georgia, out of them 20% will be at Wissol stations and the remaining 80% will be in different locations, occupying between 2,000-5,000 square metres. The company already employs 100 individuals and is considering employing 3,000 staff members over the next 3 years.
Wissol Gas Distribution Company has been providing natural gas to Telavi since the year 2008, already supplying 10,500 families in the region. Since the year 2008 the company has provided gasification to 16 villages, in 2010 alone the company added 7 villages to its gasification system.
In the territory of the Gori highway, Wissol started building of a rest and services complex, which will be opened in summer 2011. Within the framework of the project, the company will build a tourist information centre, service units and restaurants, auto-tech service, a special car park for cars and buses and petrol station. The works are being conducted by JSC Delta, Construction Company of Wissol Group.
The year 2010 was special for Wissol as the company was awarded the ‘Ruban d’Honneur’ Prize and was named among the 10 best companies in Europe. This was the first case of a company from Georgia and from a post-Soviet Republic being named among the 10 best companies out of all 15,000 companies from the European continent.
However, as Mr. Pkhakadze said, being awarded by two Mercury 2011 prises is vital for Wissol as a company operates in Georgia and is doing business on the local market. “The awards that were given to us by our customers and Georgian society at large is far more important than all the awards and prizes that we have been granted throughout our corporate history. We do business in Georgia, we serve the local people and it's natural that the recognition of our successful business activities in our country is very exciting and incomparable fact for us” said Mr. Pkhakadze.
Wissol and Mr. Pkahakadze personally, were awarded in two nominations – Wissol – The Employer of the Year and Mr. Pkhakadze – The Entrepreneur of 2011.
“This brings with it great motivation and stimulus to create new innovative projects and get further closer to the society, care about them and appreciate the trust they showed towards Wissol,” Mr. Pkhakadze said.
Q. What is the share of Wissol in total petrol sales?
A. if we take sales at pumps Wissol possesses approximately a 26-27% market share. There is observed increase in retail sales and customers have become aware of one fact. It’s better to pay a little more for petrol and choose a high quality product, which in the end protects the car, motor, and other parts of the car. The profitability is higher due to the high quality product purchase; this is pure economic-financial profit.
Q. The price of petrol increased by 0.2 GEL during the year 2011. What circumstances governed the change in price?
A. There are several factors which govern increase in the price of petrol. Georgia is wholly dependent on the prices on the international market. A change in price is directly reflected in our country. Wissol, like other companies throughout the world, purchases fuel from international markets according to Platts, an informative bulletin based on which price is calculated.
This year increase in price was governed by several factors. Firstly, the US economy recovered from the crisis and the population of the USA is the consumer of 22-23% of totally produced oil products. The second factor was the ongoing processes in North Africa and the Middle East. Libya was pumping over the world with 1,200,000 barrels of oil a day, consequently the ongoing crises and supply cut put additional burden on oil prices.
However, in recent periods the tendency has somehow been towards decrease. If the price of petrol decreases this will be both profitable for Wissol as well as for customers. A low price provides several advantages, such as sales increase. Besides, whereas a company previously spent 1.5 million USD per ship import, currently the price reaches 4 million USD.
Q. In your opinion how likely is a change in petrol price during the year 2011?
A. In previous years we have been forecasting oil prices, however due to the current rapidly changing environment I will hesitate to do so. However our strong desire is for prices to be locally within 2 GEL range per litre.
Q. How many stations does Wissol intend to open in 2011?
A. Wissol will continue developing petrol chains during 2011-2012. The company has already added several petrol stations to its network and by the end of the year we intend to open in total 12 petrol stations. The main strategy of Wissol is to wholly cover all regions of Georgia, but still. In addition we will be adding stations in Tbilisi in those regions where demand for additional stations exists.
Q. Which products are in highest demand at Wissol?
A. We are observing increased demand for European products at Wissol, which already consist of 57% of total sales. Out of European products the highest sales are of API Premium and Euro Regular.
“We are observing increased demand for European products at Wissol, which already consist of 57% of total realization.”
Q. Auto Express, the daughter company of Wissol, incorporates three major directions under its operations. What is the long-term strategy of Auto Express?
A. Wissol management pays huge attention to Auto Express. Firstly after a year’s negotiation we managed to reach an exclusive contract with French company Total, one of the world’s major oil and gas groups. The fact of Total being present in Georgia is not the success of Wissol alone, but of each investor operating and investing in our country this is an additional guarantee of stability and assurance. We formed good relationships with key figures at Total – this is a dynamic, fast-growing and interesting company from which we are learning a lot.
Secondly, in Georgia you cannot find a chain similar to Auto Express. Despite the fact that it’s not a product of daily use the demand for the service was, is, and will always be, high. At present Auto Express employs 30-40 individuals but in the future the company will recruit approximately 400-500 individuals. Auto Express will be a big chain of service stations in Georgia, as the infrastructure will be developed in Tbilisi as well as in other cities of Georgia for added comfort for clients.
Q. Auto Express for a month already has been offering the transformation of cars on gas. What advantages does this service bring to the population?
A. The company has Italian equipment and new balloons have been imported also. Auto Express provides customers with all the safety norms during transformation of petrol cars to natural gas and later individuals will have the guarantee to safely use the car. All quality parameters are protected at the same time as considering all safety parameters. The service is quite quick. Wissol intends to add several service centres due to the high demand for the service.
There are several advantages natural gas can provide to society. Firstly, the price of natural gas is twice lower than one litre of petrol. With 1 cube of natural gas an individual can travel the same distance as he would be able to with 1 litre of petrol. Secondly, considering the fact that we have Italian equipment and highly trained specialists we have created an economically profitable and safe product.
Q. How popular is Total production with Georgian clients?
A. Total lubricants have become quite popular with Georgians. Those who have changed oil at Auto Express admitted that they will continue visiting the centres. Individuals arriving at Auto Express units will get a full service package. By the support of a special computer programme, the consultant will enter all the parameters of the car and the programme will advise on the type and quantity of oil the car needs, as well as the time period of oil change.
Q. In your opinion, what will the share of Total be on the Georgian market by 2011?
A. The year 2011 is the first year for Total consequently we do not forecast a significant market share. However if we consider that currently the company already operates four service centres, intends to add two more in June and six more by the end of the year, the share of Total will be quite solid in 2012.
Q. Wissol Group did business diversification in December 2010 when it opened its Smart supermarket chain. What is the long-term strategy of Smart?
A. Smart is a separate entity with its own management, business and financial planning. Wissol is paying huge attention to Smart development and within 3-5 years we intend to be operating a wide chain of supermarkets in Georgia. Clients like the new supermarket and we are satisfied with sales figures. Currently Smart is under construction in six different places and by the end of the year we will be operating seven Smart supermarkets.