Alexandru, good afternoon. I wanted to interview you about a rare case for the Moldovan market – the buyout of a company by its manager. But I also realized we have a second reason – this year Rikipal celebrates its fifteenth anniversary.

You're right. There's something to be proud of. Fifteen years in the market is certainly a testament to longevity.

So, there will be an opportunity to either do an interview or write a news piece about the anniversary. But let's get back to the topic I wanted to discuss. I know very few cases where a hired director has become the owner of a truly large company in Moldova. I'm not talking about small enterprises, but Rikipal has a turnover of over 2 million euros per year, which means the company has substantial production assets and working capital. So, this case is definitely out of the ordinary.

To be precise, Rikipal's average turnover over the past five years is 2.8 million euros, and in the peak year of 2022, our revenue with VAT exceeded 80 million lei. In our industry, we are the largest taxpayer. Monthly, we pay about 100,000 lei in taxes, not including VAT, which, for example, amounted to about one and a half million lei in 2023.

I remember from our conversations that the name Rikipal is an abbreviation. Riga, Chișinău, pallet. Was the company founded as a foreign investment enterprise?

Rikipal was founded by two Latvians, with 100% of the investment belonging to them. At that time, they had an expansion policy, opening companies in Kyiv, Minsk, Vilnius, and Chișinău.

What were the reasons for the expansion? Did they have large production capacities or their own timber supplies?

No, their advantage was in their knowledge and development strategy. When they opened Rikipal in 2009, they already had fifteen years of experience in this industry.

Then why did the expansion stop? Since they sold the company to you, it means they started losing ground despite all their experience?

In their case, it wasn't like that. Over the last decade, they strengthened their specialization in producing niche products – pallet boards – and became the largest company in the world in this niche. In 2022, the turnover of their Baltic company alone was 110 million euros, plus at that time they also had a company in Russia with a turnover of 70 million euros. So, our market, like all other pallet markets, became uninteresting to them. Compare 180 million a year to our 2-4 million euros a year.

Okay, we jumped a bit ahead. Let's go back to 2009.

In 2010. I passed the competition for the director of Rikipal in 2010 and was appointed to the position on May 10, 2010.

What was your background at that time?

I had six years of experience in selling plastic accessories for windows and doors. In the last two years, I was already the director of that company and responsible for production. But I was no longer interested in the prospects of working there, and I was passively looking for a job, having posted my CV on job sites. That's where the owners of Rikipal found it, as they were dissatisfied with the performance of the first director and wanted to replace him.

I remember it was March, and you were interviewed by an HR director from the Baltics via Skype. After the interview, they gave you a homework assignment – to outline what you, as a manager, planned to do in terms of personnel management, production technologies, and company expansion. It needed to be done "by tomorrow". I finished around five in the morning, went out to the balcony to smoke, and listened to the birds. It was a good day, and I was pleased with the work I had done.

And you were appointed director?

No, there was another meeting with one of the founders. I waited for a month and a half. Remember the year when there was a volcanic eruption in Iceland with an unpronounceable name of sixteen letters, blocking air traffic in northern Europe? Well, that was 2010, and my founder couldn't fly out of the Baltics. Then we finally met, I went through another extensive test, everything was serious, and I was chosen out of five candidates, as it turned out.

Surely, you never thought you would become the owner of the company at that time?

That wouldn't have crossed my mind. I took over the company while it was still unprofitable, brought it to profitability within a year, and within three years, the founders had fully recouped their initial investment and started leaving all the profits for the company's development.

Was the company's specialization the same as it is now?

Not exactly. At first, I continued working with used pallets, buying and selling them. But by the end of the first year, I started producing new pallets.

What is Rikipal's current specialization and market share?

We are market leaders in the production and sale of new wooden pallets, leaders in the sale of used pallets, and in the production of wooden containers. There was a period when we dealt with palletization materials, but we eventually decided to focus on these three areas.

**Regarding market share, unfortunately, there are no exact figures, as in Moldova, there is still a share of pallet production from illegally logged timber, which is in the grey or black zone. But it can be confidently said that Rikipal holds 30-35% of the market share. Increasing our share by working in the "grey" zone is not our strategy, but I expect other changes. Moldova's timber reserves are not infinite, and they are likely to decrease rapidly. Plus, trends related to integration into the European market. I think our share will grow "naturally" as "grey" operators leave the market, as happened during the lumber crisis in 2021-2022. We then reached a market share of 60-70%, producing a record 45,000 pallets in August 2022.

And you managed to acquire such a company from the position of a hired director? How did that happen? Perhaps we can provide some Moldovan directors with advice on the modus operandi – the course of action?

I always had a trusting relationship with the owners. We met several times a year; I flew to the Baltics. I saw their business grow with pallet boards. I saw them selling off non-core companies – in Minsk, they sold a company in 2014. But still, when they started talking to me about selling the company, I wasn't prepared. The truth is, I immediately felt that I didn't want to just give away nine years of my life, the team I had built, and the market reputation. But, I won't lie, I was tense. I certainly didn't have that kind of money.

And what did you do?

At that time, Rikipal was actively being pursued by banks as a premium creditor. We had a perfect credit history, so I received offers to switch banks almost every month. I saw no point in switching. But when another bank made a loan offer, I made a counter-offer. I proposed that they consider lending to the company and to me as a private individual in a package deal, including a loan for me to buy the company.

Such a large sum to a private individual?

We consulted with the tax authorities and found a model where the loan was issued to Rikipal, but I handled the repayment and interest directly from the dividends I received. By the way, this was a strong incentive to increase the company's profit; otherwise, I wouldn't be able to pay myself dividends and repay the loan. As a result, in November 2019, I became the owner of Rikipal.

Then you definitely know how the company was valued at the time of your purchase and its current market value. Have you managed to increase capitalization over these years? They haven't been easy...

By about three times. In 2019, the company was valued at around 500,000 euros; now, its value is approximately one and a half million euros. We put a lot of effort into developing the company. Plus, thanks to our reputation and performance, last year we received five grants, from grants for digitalizing management and "matching" in the Romanian pallet market to a grant for purchasing equipment. Currently, due to our plans to enter the Romanian market, we are importing and installing a nail-making machine and starting a small construction project.

I wanted to ask you about Rikipal's plans, but you started talking about them yourself. Entry into the Romanian market?

Definitely. To simplify import logistics for Romanian companies, we are opening our own company in Romania. We will export to it, and it will sell to Romanian consumers on our behalf.

But the Moldovan market also remains strategically important for us. The integration vector with the European market will inevitably attract new investments to the country. We expect an increase in exports to European countries and in exports in general. And export means pallets of a certain quality, which Rikipal can guarantee. I don't remember if I told you or not, but Rikipal now has authorized economic operator status, which allows us to clear goods not at customs but directly at our warehouse. When we received it, there were only about 80 such companies in the entire republic. This greatly simplifies our work; we don't need to "fight" for the indicative price when clearing each truck. Our status underscores the level of trust in the transparency of our business organization, which we undoubtedly value. You know, reputation always precedes the person and the company, and I highly value the reputation we have built over 15 years of work.

Will you continue to increase the company's capitalization?

I see all the opportunities for this, especially after entering the Romanian market with its potential.

I wish you success. And thank you for agreeing to share your case. There is an inevitable process of "aging" of company owners in Moldova, plus companies with foreign investors. Perhaps your example will give someone the courage to become the owner of a business they have managed.