(15) By letter of 7 November 2008, registered on that day, Poland submitted additional information. On 1 December 2008, the Commission sent a request for information to which Poland replied by letter of 22 December 2008, registered on that day.
2.
DESCRIPTION
2.1.
The Company
(16) HSW, the beneficiary of the aid and the parent company of the HSW group, is based in Stalowa Wola, which is situated in the Podkarpackie voivodship. This region is eligible for aid under Article 87(3)(a) of the EC Treaty. In February 2006, the group included eight companies in which HSW held at least 51 % of shares (thereby controlling these companies) and 10 in which it held less than 51 %. Companies belonging to the HSW capital group supply each other with materials and services. After the parent company, the companies with the highest share capital in the group are HSW-Zakład Zespołów Napędowych Sp. z o.o and HSW-Zakład Zespołów Mechanicznych Sp. z o.o. Sales to companies belonging to the capital group account for 20-30 % of HSW’s total sales.
(17) HSW was created in 1937 and initially produced cannon and high alloy steel. Unlike its subsidiary HSW — Zakład Metalurgiczny, it is not a steel producer. In 1991 it became a joint-stock company. The State still owns 76 % of the shares, 9 % belong to employees, and the remaining public and private shareholders hold no more than 5 % each. HSW manufactures construction machinery and military equipment (cannon, howitzers etc.).
(18) In 2005 HSW had about 2 400 employees, down from 3 173 in 2002.
(19) One of the subsidiaries of HSW is the distribution company Dressta Sp. z o.o. (hereafter ‘Dressta’). Since September 2006, the latter has been fully controlled by HSW. Previously, however, 51 % of the shares of Dressta were owned by Komatsu American International Company USA (hereinafter referred to as KAIC), a competitor of HSW. In 1995 HSW transferred licenses and assets relating to its sales on foreign markets to Dressta for a period of 12 years.
2.2.
Difficulties of the Company
(20) The beneficiary’s difficulties began in 2002, when its turnover dropped from PLN 494,9 million (EUR 117,3 million) in 2000 to PLN 352,6 million (EUR 83,5 million), a fall of 29 %. Its exports fell from PLN 505 million (EUR 119,7 million) to PLN 279 million (EUR 66,1 million). The fall in turnover on foreign markets was primarily attributable to the recession and to the fact that Dressta, under the influence of its principal shareholder (a major competitor of HSW), significantly reduced its sales of HSW’s products on the North American market.
(21) In 2002 the beneficiary made an operating loss of PLN 33,9 million (EUR 8,03 million), mostly due to underuse of its production capacity. As most of the company’s sales on foreign markets were realised in US dollars and most of its costs incurred in Polish zlotys, the rise in value of the latter currency adversely affected the beneficiary’s sales and profitability.
(22) HSW was heavily indebted. Its debt in the period 2000-2002 averaged PLN 169,1 million (EUR 40,1 million).
(23) The company was also operating at a loss. The loss on sales rose from PLN 6,4 million (EUR 1,52 million) in 2000 to PLN 33,9 million (EUR 8,03 million) in 2002.
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