Zastava Kovacnica Deal With EPS Brings 220 Workers Back
After four days without electricity, the Kragujevac factory is getting power back, according to its union, and all 220 workers on forced leave return on Monday.
The Zastava Kovacnica factory in Kragujevac, which has been without electricity since November 2, is getting its power back today according to the union, and all 220 workers on forced leave return to their jobs on Monday, November 9. Zoran Miljkovic, president of the Zastava Tervo union, chair of the ASNS Coordinating Board for Serbia’s defense industry and vice president of the ASNS sectoral industrial union, told Glas Sumadije. There has been no independent confirmation yet that power has actually reached the plants.
What was agreed in Belgrade?
Miljkovic says he and Ilija Ljujic, the factory’s executive director, attended a meeting in Belgrade with Aleksandar Bjelicic, executive director for supply at EPS Snabdevanje. EPS itself invited them to settle the electricity problem. According to Miljkovic, the following was agreed:
- power returns to the factory on Friday, November 6
- the furnaces start running the next day
- all 220 employees go back to work from Monday, November 9
Until then, workers remain on forced leave with pay set at 60% of their salary. None of the available sources says how much the factory owes EPS, or whether the Belgrade agreement covered rescheduling that debt.
Why was the power cut?
EPS cut the factory’s supply on the morning of November 2 over unpaid electricity bills. The backup supply contract Zastava Kovacnica held with EPS Snabdevanje expired on October 31.
The union had warned about this in advance. On October 30, ASNS sent an urgent appeal to Elektrodistribucija Kragujevac asking for the contract to be extended by at least a month, so that a debt rescheduling could be negotiated in the meantime. It also warned that a supply cut could damage equipment bought through Defense Ministry investment cycles, which it values in the millions.
After the cut, the Association of Free and Independent Trade Unions (ASNS) issued a statement saying that nearly all defense industry factories owe money to EPS and that concern has spread among employees. Its message reads: “Defense industry factories, Zastava Kovacnica included, will not be able to settle these debts if they do not work.” ASNS called on EPS management to agree deadlines and a repayment method with the factory directors, without halting electricity deliveries.
How is Zastava Kovacnica doing financially?
Zastava Kovacnica AD Kragujevac is majority-owned by Zastava Oruzje AD, which holds 68.75%. The remaining 31.25% belongs to the Republic of Serbia.
According to credit rating agency CompanyWall, the factory has posted net losses for years, and the loss deepened in 2025:
- revenue: 575.5 million RSD (about 4.9 million EUR), against 656.3 million RSD (about 5.6 million EUR) in 2024, a drop of 12.3%
- net loss: 405.8 million RSD (about 3.5 million EUR), against 279.7 million RSD (about 2.4 million EUR), an increase of about 45%
- EBITDA: minus 290.8 million RSD (about 2.5 million EUR)
- equity: 21.6 million RSD (about 184,000 EUR)
Euro amounts were converted at a rate of 117.2 dinars. Sources disagree on headcount: ASNS cites 220 workers sent on forced leave, while the 2025 financial table in a Biznis.rs article records 213 employees.
What is the union demanding at Zastava Tervo?
In an interview with Biznis.rs, Miljkovic also discussed a neighboring problem, the Zastava Tervo factory in Kragujevac. The ASNS Zastava Tervo union recently demanded the resignation of that factory’s management. Miljkovic says he has been pushing for changes for more than a year and that debts to suppliers have grown to several million euros. Of conditions in the halls, he said:
We have no taps and no water to wash hands in the work halls, and we have no heating either. The gas installations have been put in, but the system is not connected. The state of occupational health and safety is also problematic.
The union now demands that qualified people take over management and that responsibility be established for the factory’s past performance. Miljkovic added that he expects a new government to be formed soon and talks with the defense minister about the company’s problems.
