Published in Nacional number 773, 2010-09-07

Autor: Robert Bajruši


SMS owner between illness and insolvency

SRDAN MLADINIC, THE FOUNDER AND OWNER OF THE SMS COMPANY, lost his firm while in police custody at Remetinec prison, now has only an apartment and a car to his name, and cannot take a job while caring for his daughter Srdana

CARING FOR HIS DAUGHTER Every day Mladinic does so much work caring for his daughter that the therapists that could take his place would cost from 15 to 20 thousand kuna a monthCARING FOR HIS DAUGHTER Every day Mladinic does so much work caring for his daughter that the therapists that could take his place would cost from 15 to 20 thousand kuna a monthIt was exactly four years ago, sometime in the early autumn of 2006, when Srdan Mladinic, the founder and owner of the Split-based SMS company, was justifiably numbered among the top entrepreneurs in Croatia - once a shipyard worker, he moved on to become a well-known businessman and the head of the Croatian Employers Association branch office for the Dalmatia region, whose products were winning awards in America and Japan, and who had plans to increase SMS annual turnover to 20 million euro by 2013. It was an almost perfect tale of a Split native from a pauperised family of farmers, who started from scratch and created an internationally successful company in the space of two decades, but continued to live a normal life with his wife and daughters in their 11th floor apartment in Split's Krizine quarter.

Four years later, in early September of 2010, 55-year-old Srdan Mladinic is going though the toughest moments of his life. Just recently one of the best-known businesspeople in the country, he first saw the complete downfall of his business, losing SMS, and then, parallel to the ruin of the company, whose 180 employees wound up on the unemployment lists, while in police custody at Remetinec, the health of his eldest daughter took a turn for the worst, by all accounts as a result of stress, and she is now confined to a wheelchair. Every since being released from police detention in early March, Srdan Mladinic is without income and has dedicated himself completely to attempts to heal his daughter.

IN SPITE OF GLOOMY FORECASTS, because the illness in question is advanced multiple sclerosis, Mladinic has decided to not give up and has completely withdrawn from the public eye. He spends his entire days with his daughter, assisting her in her basic needs, taking her every day to Mount Marjan park, and frequently to Zagreb's Rebro Hospital or the thermal spa in Varazdinske Toplice. Srdan Mladinic absolutely refuses to speak with the press, offering only the short explanation that he sees everything that has happened to him of late as part and parcel of life. Isolation is, besides, his lifestyle and even when at the peak of his success he did not frequent public places, or socialise with tycoons or spend his earning on status symbols. He has dedicated his entire life to his family and his work, and is now going through very tough times in both regards. This once successful businessman reinvested all of his earnings into SMS, and when the company went under, Mladinic was left literally without anything aside from his family apartment and automobile. When he wound up in Remetinec prison in November of last year the rest of his family soon fell upon hard times - 27 years ago his wife Mirjana also fell ill with multiple sclerosis and is on a disability pension, the elder 31-year-old daughter Srdana fell into ill health rapidly and could no longer walk, while 23-year-old Ana was unemployed at the time. The situation in which the Mladinic family found itself shocked their long-time acquaintance Juroslav Buljubasic, owner of the SEM company, who, together with a number of business people in Split, pooled a donation of 100,000 kuna to pay for lawyers and the basic needs of life.

"We now live like an under-average Croatian family, but that's how life goes. Bankruptcy is not nice, but it is also not tragic, because many business people have been bankrupt and many made a comeback. I know that I did nothing bad and, even if I could, I would not change my past in the least because that would no longer be me. I have nothing to complain about and the only thing I am interested in is how I can help Srdana to overcome the difficulties she now faces," Srdan Mladinic recently said in a private setting. In these few sentences Mladinic has described the situation he finds himself in, which boils down to a bankruptcy and a struggle for his daughter's health. It all started last year, when the press discovered that Darko Marinac, then the president of the Podravka supervisory board, provided a 60 million kuna line of credit to Mladinic's SMS. Marinac did not notify the board of directors or supervisory board of the loan, and it quickly became evident that SMS was not in a position to pay off the debt. A police and judicial operation was launched that finished with the bankruptcy of SMS, while charges have yet to be filed. Mladinic was arrested on November 21st of 2009 along with five other suspects. They were suspected of having created a criminal enterprise that abused its office and authorities, i.e. tried to purchase Podravka through illegal financial transactions, allegedly causing over 250 million kuna in damages to the Koprivnica-based Podravka food company. Arrested along with Mladinic were former Podravka heads Darko Marinac and Zdravko Sestak, two former members of the board, Sasa Romac and Josip Pavlovic, and FIMA director Milan Horvat.

MLADINIC SPENT ALMOST FOUR MONTHS in Remetinec prison, in a cell he shared with six persons, and was released on the first of March. He appeared quite relaxed on the photos taken of him when leaving police detention, but during the somewhat over one hundred days he had been bereft of his liberty changes took place that would definitely change his life. Back in early February the Commercial Court in Split launched bankruptcy proceedings at SMS and Ivo Bucan was appointed the bankruptcy director of Mladinic's former company. The bankruptcy proceedings marked the beginning of the end of the once successful Split-based company, and for Srdan Mladinic the end of a business he had launched 21 years ago. The SMS management had previously submitted a request to initiate bankruptcy proceedings because the firm owed over 157 million kuna. More than half of that amount was owed by SMS to Podravka, as a result of which Srdan Mladinic wound up in Remetinec. The Commercial Court also ruled that there were no conditions present to continue SMS production. Bankruptcy director Ivo Bucan stated that the long-term obligations to creditors were in excess of 170 million kuna. In his words SMS had in recent years spent 20 million kuna more than it earned. SMS went belly-up, 150 employees were laid off, and the company assets, its land, buildings, manufacturing lines, and the SMS brand, were given to Podravka as collateral.
WHILE HE WAS IN police custody at Remetinec prison, the health of his elder daughter took a dramatic turn for the worse. Srdana Mladinic was also among the 150 SMS employees that lost their jobs and, by all accounts, she could no longer walk as a result of the stress, and when Mladinic returned to Split his 31-year-old daughter was confined to a wheelchair. When he saw what had happened to her he decided to cut short his struggle to regain SMS and has completely dedicated himself to assisting her rehabilitation. A half-year has passed since then and Mladinic has completely cut off contacts with most of his acquaintances, and his life consists of basic care for Srdana's daily needs, from training and rehabilitation to ever more frequent visits to the neurological clinic at Zagreb's Rebro Hospital. Srdan Mladinic has a strong emotional tie to his elder daughter, who graduated a few years ago from the Faculty of Management in Dubrovnik. In conversation he remembers that, as a small girl, during school vacations, she would come to SMS and, in spite of illness, spent her vacations working at her father's company. After graduating she took a job at SMS and was in a way preordained to one day take over the reins of the company, but events followed that shattered plans for the further development of SMS. For months now Srdana Mladinic has been under a strict daily therapeutic regime, and her father Srdan has become her mainstay. In order to be with his daughter full time Srdan Mladinic has rejected the idea of re-employment.

This decision has an emotional and a material aspect, as it turns out that he does the work that two or three therapists would otherwise do, and that would cost Mladinic from 15 to 20 thousand kuna a month. Mladinic has given up trying to find a new job, but points out that he has the energy and ideas needed to get back into the business world.

IT ALL DEPENDS, OF COURSE, on how the treatment of his daughter will go, and whether charges will be filed against him, but there is no doubt that the founder of the SMS company has not lost his passion for doing business. He has, besides, already started from nothing twice in the past and managed to create a successful company, and establish himself as one of the best-known businessmen in the Dalmatia region and in Croatia as a whole. Srdan Mladinic was born in 1956 in a family of farm workers in Split. Up to 1985 he worked as an auto electrician, first at a shipyard, and then with INA. He was not satisfied with his meagre wages and in the mid 1980s he purchased a truck in which he transported fish. He earned his start-up capital in four years and in 1989 set up SMS, rented work premises and took on a few workers through the student service. The first year saw his company salting fish and manufacturing intermediate goods, and 1990 saw the start of industrial food manufacture. He soon became one of the better-known producers on the Adriatic seaboard, and it looked like nothing could stop the growth of his operations.

DEDICATED TO HIS DAUGHTER SRDANA Mladinic has completely dedicated himself to caring for his daughter and hopes that medical science will find a cure for multiple sclerosisDEDICATED TO HIS DAUGHTER SRDANA Mladinic has completely dedicated himself to caring for his daughter and hopes that medical science will find a cure for multiple sclerosisBUT THEN IN 1994 the SMS plants were lost to fire and Mladinic found himself on the verge of bankruptcy. Up to then he had invested the entire earnings into new business and suddenly here was a danger that he would not be able to meet orders and lose his clients. Mladinic decided to start afresh and since he needed fresh capital to rebuild his business he sold his family apartment and moved with his wife and children to live as subtenants in Kastela. Over the next 15 days he leased the Dalmacijacement premises in Kastela, and his employees worked nights on new products. Mladinic concluded that the source of profits would be inexpensive fish breakfast meals, and later reoriented the company to the production of olives and olive oils, jams and ready meals. These were the peak years of Srdan Mladinic's business career, culminating from 2004 to 2006 when SMS broke into the US market, with his products winning medals at food fairs in New York and San Francisco. At the time Mladinic employed 180 people, making cameo appearances in VIP GSM operator TV commercials and had plans to grow SMS annual turnover to 140 million kuna by 2013. In spite of the risk he took out a loan and set up a major olive tree plantation near Skradin, and also invested in a top-flight laboratory for food quality testing. And while he had good results as a businessman, he never adopted the lifestyle led by most Croatian tycoons. His biggest investment was the 2003 purchase of a 98 square metre 11th floor apartment that got his family out of the role of subtenants it had played for seven years. He drove a BMW, but those were his total assets, even though the annual turnover at SMS was then 20 million kuna. "I am not interested in yachts and villas, I am not that kind of person. Olive growing is not a business in which you can get rich, but people with olive trees never go hungry. That is my motto and that is why I am happy that I do not need four homes and four cars since one is quite enough," he told Nacional in September of 2006. Olive growing is Srdan Mladinic's greatest passion, but it appears that this passion to a large extent brought on his bankruptcy. He embarked on a business venture that could only pay off in ten year's time, tried to disentangle himself with the help of a line of credit from Podravka, and as the result of several bad calls is now on the verge of bankruptcy.

BUT THERE IS NO WORD or gesture whereby Srdan Mladinic leaves the impression of a person devastated by misfortune. He insists that he did not break the law, and if he succeeds in proving that in court, he intends as a free man to start again from scratch a fourth time. Until then he has completely dedicated himself to his daughter Srdana and has not lost hope that modern medicine will soon find a cure for multiple sclerosis.