Zoltán Nagy, Owner and Managing Director
Zoltán Nagy, owner and Managing Director of DML Hungary, started his career as a musician. Another passion of his was football; there was hardly a day when he wasn’t kicking the ball around. “Once, a teammate brought me an A4 sheet of paper outlining the main features of so-called induction lighting: at the time, this technology seemed quite special and interesting”. He and two of his partners therefore took the plunge into the unknown, agreed exclusive distribution with the Chinese manufacturer and started importing the technology.
Induction lighting technology is mainly used for high-power general lighting functions: industrial halls, warehouses, offices and car parks. The business started with modest capital, with a few million forints invested in the first container. The products were presented at the Construma trade fair; compared to the fluorescent tube technologies of the time, they had a lifetime of 100,000 hours with a 5-year guarantee. Since the gas in the induction fluorescent tube is excited from the outside by a magnetic coil, “there’s practically nothing that can go wrong”, says Zoltán Nagy. Confidence in the company was reinforced by the fact that Goldman Sachs was a co-owner of the patent.
They received a lot of enquiries, but the crisis of 2010-2011 stalled their development as the economy stagnated. Later, however, they became suppliers to companies such as the Paks Nuclear Power Plant, the Hungarian Post Office and the Municipality of Budapest. In 2013, they built the stadium lighting for Gyirmót FC, where they managed the project from design to delivery and implementation. This year saw the expansion of the company’s activities. “This was a milestone, as the addition of construction allowed us to move to more flexible pricing, offering a more comprehensive service”. Their references now include companies such as Zwack, Bosch, Suzuki, Aréna Plaza, Mátra Power Plant, Magyar Telekom, MÁV, OMV, AUCHAN and OBI.
It was in 2015 when the business really started on the road to success. LED technology was added to the portfolio. The secret to success, according to Zoltán Nagy, is not what they do, but how they do it: they select the best components for the project. “We don’t want to sell our own product at all costs, we try to do the job as perfectly as possible”. After design, delivery and construction came financing. In 2018, they started to implement self-financed energy projects. The so-called ESCO model (Energy Serving Company) means that the customer can develop and invest in a leasing scheme, even without any of its own resources. During the design phase, the energy demand is determined by how much can be reduced by the modernisation, and the customer pays rent from the money saved for the period specified in the contract (5 years), so VAT is recoverable, the investment is not charged to their books and there is no depreciation. Importantly, the customer is not just renting the equipment, but is paying for a service, and the ESCO company that lets, finances and invests in the system is responsible for operating it. At the end of the term, the assets can be transferred to the customer with a symbolic residual value.
A new field of activity started with a coincidence. “In 2017, a client of my father mentioned that a Hungarian acquaintance in Slovakia was selling his solar power project company. At that time, we were buying these project companies speculatively, borrowing money, and I thought I would sell them at a profit later.” Then came the idea of what would happen if they got into this business. It required a lot of information, know-how and permits, but in March 2020, in the middle of the epidemic, construction started and on 5 June, 2 megawatts of capacity were turned on in Kecskemét.
“I have a degree in economics, but for a long time music was the main thing in my life. Music is a completely different world, it teaches you to be more open, more flexible, to look at the world through a different lens.” In the early years, it was with this openness that the owner watched the competition. There were companies that aimed for the highest possible volume, with growth rate as the main objective. “I never pushed for that; efficiency and low costs were always more important to me. Growth at any cost is not the goal.” For the time being, he is not thinking of expanding abroad; “we have so much work in Hungary that we can hardly keep up, and I think this decade will be the decade of solar panels”.
Zoltán Nagy also had the exit in mind. He has seen examples of it in his environment; he admits that such a decision is not of the devil, it requires a wise, mature, intelligent attitude and approach. “Because of my colleagues and the success I’ve achieved through daily struggles, it’s not topical at the moment, and I find it difficult to let things go.” The company achieved an outstanding result last year, in terms of both turn- over and profit. All the company’s activities have contributed to this, but solar power plant construction stands out. Some of the self-built solar power plants have been sold and some remain in private ownership, which is both a rational idea and a matter of the heart.
Financing has always been a key issue in the company’s activities. “We did the lighting upgrade of the IKEA parking lot by borrowing HUF 6 million from friends, without any bank financing, and we reached the current level step by step”. Later, of course, a good relationship was established with financial institutions, as Zoltán believes that the ability to prefinance is very important. Today, they have relations with two large financial institutions, and the preferential state loan schemes have also offered great opportunities for expansion. DML Hungary can be classified as an SME in terms of its size, but its activities have led it to be dealt with by corporate account managers. In addition to general current account and working capital financing loans, they have also entered the project finance area, which requires an active involvement by banks. The company is also financed by venture capital, which is a sign of confidence.