4.3 NIFs as proprietors

As noted above, one of the main objectives of NIFs was to increase the value of shares of the companies for which they were responsible. This objective was met through:

• active proprietary supervision, mostly with the aim of improving the quality of management;

• ensuring access to capital by, among things, granting loans and providing credit suretyship;

• assisting with the acquisition of new technologies and the creation of new products;

• facilitating access to foreign sales networks and assisting with the development of modern marketing methods ;

• assisting with finding strategic investors.

The results of the NIFs restructuring efforts became visible after two years , as shown by a survey carried out in February 1998 among all funds, which revealed important qualitative changes in the portfolio companies management systems. The extent of those changes is shown in Table 4.1.

Table 4.1: Management system modernization in NIF companies

Rank	Measures introduced	Number of companies in which the measures were implemented
1	Adoption of a strategic business plan	404
2	Setting up of a marketing department	218
3	Introduction of cost calculations, differentiating between fixed and variable costs	380
4	Identification of cost and profit centres	202
5	Systematic analysis of product profitability	310
6	Introduction of budgeting and budget discipline	339
7	Implementation of integrated management systems, complex computerization	145
8	Motivating remuneration systems (performance-based renumeration)	330
9	Changes in management boards : whole management board president member responsible for finance member responsible for sales and marketing	39 167 145 154

Source: Based on data in a report by the National Investment Funds Association, Warsaw, March 1998 (unpublished).

Significant progress was also noted with the introduction of new technologies and the modernization of existing machinery (in 240 companies), and there was a rise in the portfolio companies capitalization due to investment by individual NIFs. According to the report, the total value of the NIFs investment in their portfolio companies at the beginning of 1998 was nearly 500 million zloty: 293 million in the leading companies and 203.3 million in minor companies. These investments covered almost 30 per cent of the companies controlled by NIFs. At the same time employment levels were rationalized in order to meet the challenges of market competition. Individual and group dismissals took place in 231 companies, but additional employees were hired in 105 companies.

Progress towards the programme s ultimate objective “ the complete privatization of the portfolio companies “ was particularly noteworthy. The 1998 NIF report shows that two years after the companies shares were assigned to the NIFs as many as 130 (that is, over 25 per cent of them) had been completely privatized or their privatization process was nearing the end. Considering that the programme had a ten-year horizon, this can be regarded as a remarkable success.