"The company is one of Ukraine's top twenty in terms of gross income"

Source: Donetskiye Novosti, Donetsk, in Russian
19 Dec 02; pp 4, 5

Published by: BBC Monitoring Service
United Kingdom; Dec 27, 2002

BBC Monitoring Service: "The ARS Donetsk-based industrial conglomerate owes its success to team spirit and the friendly relations among senior managers, the general director, Ihor Humenyuk has said. He especially values his close relationship with another Rinat Akhmetov, a reputed oligarch from Donetsk.

"The following is an excerpt from an interview Humenyuk gave to Rimma Fil and Oleksandr Holyzdra, published in Ukrainian newspaper Donetskiye Novosti on 19 December:

Ten years is history, especially in Ukraine, where there is a "hot" probation period, like under the ground. Over 10 years small firms have turned into giants and, on the contrary, apparently unshakeable financial empires have crashed.

[Passage omitted: more on this]

Today almost everyone knows the ARS joint-stock company.

[Passage omitted: expanding on this]

Today, ARS recalls a blood-bearing system ensuring the life support system of a most complex organism - industrial Donbas. ARS means coal, coke, machine-building... [ellipsis as published]

And, looking at the result, there is a strong desire to look back into history to answer the questions why, of the thousands of similar firms, only a few survived? How was the ARS business built up? And, in principle, is it hard to be a Titan?

On the eve of the company's 10th anniversary, we talked about all this with the person whose name is forever connected with it, the general director of ARS, Ihor Humenyuk.

[Passage omitted: company started from zero]

[Fil, Holyzdra] There were hundreds of companies like ARS. Why is it that ARS remained, while others disappeared?

[Humenyuk] I myself am trying to find an answer to that question. We started out without any base capital, without priority possibilities. There was not even a trace of what is known as administrative resources. It wasn't easy... [ellipsis as published]

Of course there is a certain element of luck in success.

But the main thing, I think, lies elsewhere. ARS had and still has a fairly cohesive, combative and hard-working collective. Then, 10 years ago, we were working not because of fear, but because of conscience. We ourselves believed we would succeed. And that special atmosphere, that single team spirit, helped us then and still does.

[Passage omitted: some difficult times in the company's past]

We have never taken part in any adventurist undertakings. We always tried to calculate our strengths. This is very important.

[Passage omitted: generalities about company's success]

[Fil, Holyzdra] What pushed you and ARS into stable business?

[Humenyuk] The foundation and cornerstone of our business was the purchase of a share package in the Avdiyivka coke chemical plant. After that, it was working with the Illich metallurgical combine [in Mariupol]. We found a stable partner in that combine.

And systematic work with enterprises in the coal industry started on the basis of those two factors. It was this, I would say, that was the basic factor of success.

[Fil, Holyzdra] How did you operate? At a level of intuition, or did you even then have analysis groups?

[Humenyuk] Don't think that it was easy. The purchase of shares in that Avdiyivka plant was a very serious, risky step for us at that time. We acquired them on credit, by means of a loan.

[Passage omitted: mistakes were made]

We had no removal of capital to third countries. Once again, I stress that we never had administrative resources. Nobody ever gave us anything, never gave anything to the board. We had to achieve everything by ourselves, and probably that was good for the development of the company. We took part in tenders, went into ownership with states or other companies and later into real management of enterprises, and we won because of our "brains". I would call this re-investments.

This gave us the most important thing - independence. That is what ensures that today ARS has a real possibility of looking ahead.

[Passage omitted: company philosophy evolved over the years]

[Fil, Holyzdra] What do you consider the most important achievement in the work of ARS?

[Humenyuk] One of the company's socially significant successes was the programme to develop mines. The main difficulty was that the ARS private enterprise was proposing cooperation with state enterprises. The programme produced real results.

Serious work on it started in 1998-1999. And over the years (jointly with the miners and the Fuel and Energy Ministry) we managed to raise coal production at several enterprises twofold (for example, Dobropillya) and substantially increase wages.

I remember Dobropillya three years ago and compare it with what it is now. I was there on Saturday. Of course, it is still far from perfect. But people are already looking at it with fresh eyes.

[Fil, Holyzdra] But, at the same time, you are also condemned?

[Humenyuk] Some people may be dramatizing the situation. In actual fact, we experienced an absence of help and understanding only in the period when the fuel and energy complex was headed by [former deputy Prime Minister Yuliya] Tymoshenko. But basically, we always found understanding in Kiev.

It is another matter that very few people are interested in supporting social programmes when engaging in private business. But once again I repeat - everyone chooses his or her own road.

[Fil, Holyzdra] As a manager, have you made use of foreign management experience or had some training somewhere?

[Humenyuk] I still believe that there is no need to blindly follow foreign experience in our conditions. Today, when the economy of Ukraine is becoming stronger, this may be topical, but not 10 years ago.

By the way, in 1991 the miners' trade unions almost sent me off to the USA for five years of study. The Americans were to have taught me economics. Thank God, the trip fell through. If I had come back in 1996, even with the very best US knowledge, I would not have landed on my feet.

In Ukraine, you need to go through everything from the very beginning. With all the difficulties and hardships.

[Passage omitted: self-taught businessmen are the most successful]

[Fil, Holyzdra] Do you have any clashes of business interests?

[Humenyuk] We have all been able to find our own niche in a fine and worthy way. We have genuine male friendship with Serhiy and Andriy Momot, Anton Pryhodskyy, Oleh Mkrtchyan and Valeriy Stepanenko. This in what they call business Donetsk-style. And in creating such an atmosphere, including in ARS, the role of my best and closest friend Rinat Akhmetov is unquestionable. We could talk about him for hours. And there's no need to consider my words as being too high. The only thing I'll say is that having such a friend and partner at my side is a great responsibility, a high honour and enormous happiness.

[Fil, Holyzdra] You spoke of the company's corporate spirit and the existence of a single team. Who is part of it, and how was it formed?

[Humenyuk] Several people form the nucleus of ARS. From the first day the company was formed, Iryna Fridman, the chief accountant, has been working with me. However, it is difficult to describe her as only a chief accountant, so broad and important are her duties. She is more like a financial director. We have known each other since our student days. And whereas ARS is 10 years old, I was best man at her wedding twenty years ago.

Volodymyr Sholokh, a well-known figure in the Donbas, is another loyal member of the team. We worked together in the Shakhtar trade house. He is older than us and we have always learned wisdom and a sense of balance from him. He has given me personally a lot of help in making correct decisions.

He is a sort of wise mentor for us.

Ihor Derevlev, the present general director of the Ukrvuhillyamash company, has been working at our company from the very beginning.

The most "advanced" of the new wave in the ARS management is Vasyl Mykulyn. Today he is an established manager, and a large part of current and strategic work is up to him.

[Fil, Holyzdra] Many people believe that one's friends and relations should not be brought into business. Your closest deputies and assistants are friends and relations. Does this not get in the way, and do you not lose friends because of this?

[Humenyuk] There probably is a danger when you yourself are not confident of your acts. For me, people are the priority. And for me, the main thing is people's business-like qualities. And if you trust and see that your friend is worthy and competent to work in a serious post, then that's how it should be.

[Passage omitted: no friends lost]

[Fil, Holyzdra] What about your relatives? Your elder brother, Oleksandr Humenyuk, is the head of Tekhnopark.

[Humenyuk] The situation there is absolutely the same. I am glad that people close to me understand that work is work.

[Passage omitted: company diversification into running a health centre, friendly atmosphere at work, optimism on Ukraine's economic future]

In 2000, the gross income of ARS was 2.307bn hryvnyas, and in 2001 - 2.846bn hryvnyas [about 528m dollars]. The company is one of Ukraine's top twenty in terms of gross income.