Erdemoglu Holding, which is planning to invest $ 1 billion in Sasa is looking for a place for new investment of $ 7.5 billion. Ibrahim Erdemoğlu, the President of Erdemoğlu Holding, who is seeking for lands in Yumurtalık and Dörtyol announced that this investment could return to the refinery.
Erdemoğlu Holding, which started to engage in the polyester industry four years ago by taking over 51 percent of Sasa belong to Sabancı Holding focused on strategic investments. The Holding will now accelerate its investments in carpet and polyester fields. The Holding, which will deploy its investment of $ 1 billion in the Sasa plant in Adana in January, is looking for a place for its new investment of $ 7.5 billion. İbrahim Erdemoğlu Chairman of the Board of Directors of Holding says that the facility investment that they want to be at the seaside can host the refinery enterprise in the medium term. We talked about the transformation and investment moves in the group with Erdemoğlu who states that the Group will proceed its foreign sales-oriented way with strategic investments.
Can we say that the challenges will be overcome in 2019 and will even remain behind?
I think real challenge has just begun. There will be greater challenges in 2019. Because the country's resources, income and equity are certain. We grew fast when plenty of resources came from outside. Today, there is not an abundance of resources. We need to speed up the flow of resources from outside to Turkey.
The costs are high, isn’t it?
The price of something that does not exist is high. We have to find it despite of the high price. The water in the pool isn't enough now. In other words, domestic resources are insufficient. If the source does not come from abroad these difficulties will increasingly continue.
Where do you see the solution? Will switching to production economy reduce problems?
Our people love ease. Our people pursue to get unearned income. However, production is not an easy business. The production economy cannot be achieved from today to tomorrow. This is not a factor that will solve today's problems. It is a long-term solution. Let’s see, what FED Chairman Ben S. Bernanke said in 2012 “the period of cash abundance was over”. What did we do as a country? Nothing... We took action in our own group and we prepared our sub-structure according to this fact, our domestic market sales were at 60 percent. After this process, we focused on export. At today's point, we have increased exports to 85 percent on the carpet field. Moreover, we have done this by moving from developing countries to developed countries. Our products are exported to countries such as USA, Canada, Europe, Australia and Japan. Imagine that we could have done this only in six years.
In the five-year period there was a target of $ 3 billion in turnover. Have you revised the figures? We have no deviations in our goals. I guess we will reach this goal in 2021. We are an exporter company and our foreign sales will be 500 million dollars this year. In 2017, our group closed the year with a turnover of 6 billion TL. We aim to close the year with turnover of 7.5 billion TL. For 2019, we are planning to grow 35 percent with the deployment of investment in Adana.
Do you have a goal to move your production abroad?
There's no need. For example, it sounds more reasonable to be present here where carpet industry heaps together. We can 5 percent of cost advantage in fields such as human resource, machinery, side industry Heaping together in carpet industry is not observed elsewhere in Turkey Imagine that 40 percent of machine-made carpets are produced in Turkey. We produce 5 percent alone with our Merinos and Dinarsu brands. This figure will increase to 7 percent in the next five years.
How is the group's income distribution?
Currently 46 percent of the turnover comes from Sasa. Merinos carpet company, 25 percent, Dinarsu 13 percent, Özerden 8 percent, Zeki 6 percent and furniture provides 1 percent. Of our turnover But we're getting out of this business. Because we decided to deploy investments addressed to Turkey’s current account deficit. Our investment targets have changed after Sasa. We decided to focus on the production of the main raw material products that needed by Turkey. We will invest in strategic areas anymore.
“We spin the wheels by making concessions from our profit"
“The average EBITDA rate of our group is 16 percent. This may decline to 14 percent in the forthcoming period. Because nowadays everyone is moving towards with focus of of selling their goods. There is no profit-oriented approach. Obviously, industrialists are trying to spin the wheels by making concessions of profits. "
“We're leaving the furniture business. We are now focused on strategic investments. In this line, we will invest $ 7.5 billion in polyester business.
Is there a new agenda item in your investment plan?
This year we were awarded an incentive certificate. In case the land issue is settled we want to give support to meet the Turkey's current account deficit by producing commodities that Turkey imports raw materials This is an investment program of $ 7.5 billion. We communicated that that we were determined to start construction quickly to the ministry. This is a 10-years project. I am talking about a project that solve Turkey's current account deficit $ 4.5 billion - $ 8 billion indirectly - when these investments literally come to reality,.
What will you produce in this facility?
PTA, propylene glycol, PVC as well as raw materials used and prevents wetness in diapers will be produced. . Our investment of $ 1 billion is ongoing in Sasa in Adana. Our fiber plant will be deployed in the first week of January. Sasa will constitute 70 percent of our overall turnover over time.
Where will you make the new investment?
This investment has to be located somewhere near the sea. Therefore, Yumurtalık or Dörtyol, the two points where we have interested and suitable for the investment. Here we continue our search for land.
Will this work move forward to a refinery after the products you mentioned?
That's why we want the land to be so big. Obviously, we are considering a refinery investment. We have infrastructure studies and projects for this. But this is not a short-term plan.
Who are the landowners? At what stage the negotiations?
Land in Dörtyol belongs to Oil Investments. However, as I said, a large land is needed, and Treasury and individuals have lands in this region. Therefore, we want to do this work with the incentive and efforts of the ministry. Our goal is to make Turkey a Polyester base of the region as how we have made it for carpet industry.
Ekonomist Magazine - October 28, 2018
Interview - Sibel Atik
