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Dekart paints the town red, pink, blue…

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Output has doubled

Checking quality in the factory

The plant now runs two shifts

It’s only in England that “like watching paint dry” is a colloquialism meaning “boredom”. In Russia, where a construction boom has over the past decade altered the face of major cities – and none more so than Moscow – every city resident is enthralled by the ever-shifting kaleidoscope of building, altering, demolishing, designing, improving and finishing with marble, little kremlinesque pointy towers and the smartest of paints in the subtlest of new shades.

Much of the building work done in Moscow comes through the grace of Mayor Yuri Luzhkov, whose wife, Elena Baturina, runs the city’s biggest construction company. But there is room for smaller competitors in this fast-expanding market.

Take Dekart, for instance: a Russian trade and industrial group with 180 employees, which has existed since the very beginning, “in the era of elemental wild capitalism,” as Dekart’s Maxim Chernov puts it today. After the firm was created in 1992, it took a few years for bosses to find their way through the maze of new opportunities and risks. They traded imported construction materials. They built a new workspace for themselves. Finally they hit on the notion of actually making and selling their own high-quality domestic and professional paints, construction and decorative materials.

This year, Dekart clinched a new deal that is helping it develop further. It went to Russia’s Absolut Bank –recipient of a $10 million EBRD loan for on-lending to small and medium-sized enterprises – and borrowed $3 million to update its equipment.

Broadening lending

“We want to broaden our lending, which EBRD funding is helping us do,” said Absolut Bank’s Vladimir Plenkin, head of the loan portfolio monitoring division, “so we are constantly seeking companies we can finance. We’d discussed a loan long ago with Dekart, and though we didn’t do a deal at first, we liked each other. We met again this year and were impressed with the quality and pricing of their production.”

The result is a new line for producing water-based painting materials inside a complex with electronic security cards at every doorway and lift entrance. Paint quality is randomly tested by scientist specialists in a side room off the main warehouse and factory space. The clean, modern-looking paint-making equipment, from Spain’s Oliver & Battle, enables Dekart to work two shifts daily rather than the single shift of last year. “We’ve doubled production to 40 tonnes per day this year,” Mr Chernov said.

The factory at Khimki, a settlement on the outskirts of Moscow, is where Dekart produces its smartest products: Jobi premium paints for professionals and Olimp materials for domestic and professional use, produced with European technologies. Dekart also make a third product line, Ekspert, but Mr Chernov says “that is profitable and much in demand but lower quality. It’s made elsewhere, with a lower quality of equipment. Here we want to observe the decencies and trade on the quality of what we produce.”

Business on the rise

“Our turnover last year was $29 million but it should go up to $35 million in 2005; meanwhile, the volume of our own production will have gone up from $6 million to $10 million,” he adds.

Most of Dekart’s clients are hypermarkets or big construction companies as well as the hundreds of construction material markets and shops scattered through Moscow.

Mr Chernov is hopeful that he’s taken his loan out at just the right time. “The market has been pretty much the same for the past few years, but there’s big growth in the building trade now,” he says. “The development of mortgage lending means that another boom is building up. More people are acquiring buildings and refurbishing them. And a lot of smaller companies are coming to the fore to supply them.”

Written by EBRD Press Officer Vanora Bennett

9 December 2005