Vietnam Daily News

Vinaconex finding hard to withdraw capital from Cam Pha Cement plan

Written by Dailynews.vn Thursday, 15 December 2011 21:16

By the end of November, Cam Pha Cement Plant project, the largest investment project that Vinaconex Joint Stock Corp (coded VCG) has reported suffering accumulative loss of 1.6 trillion dong, including forex difference. Apart from incapability for operating the project, Vinaconex also found it hard to withdraw capital from Cam Pha Cement Co (CPC). If the corporation fails to solve this business affairs, in 2012, Vinaconex would incur loss although the other business activities may bring in trillions dong of profit. According to primary calculation, at present, in terms of lending interest only, CPC has to pay 500 billion dong each year. Meanwhile, the company faces difficulty in making profit because of high competitiveness in cement markets. Initially, when making investment in 2005, the investor expected to pay lending interest of 12 percent per year only. Meanwhile, at present, the long-term lending ratio was posted at 18 percent per year, and lending costs for working capital of 21 percent per year. In the context when supplies surpass demand, the new Cam Pha cement plant had to compete harshly with other large producers such as vicem, Nghi Son, Chinfon, so the company had to spend much in sales cost. With no experience in cement trading industry, while the cement plant's designed capacity of up to 2.3 million tonnes per year, and modern technologies, VCG's leaders haven't got capacity for operating and managing the projects. The corporation's management board had held many meeting to find the solutions for this problem. In late 2010, Vinaconex changed the leaders in CPC, including general director, sales manager, financial manager that brought in some improvement. However, the corporation still suffered from pressure of high lending rates. The accumulative loss in first three years, up to the end of 2011 was posted at 1.6 trillion dong, in comparison with initially expected loss of 500 billion dong. The corporation had to share the debt with CPC, and that the reason that has caused bad effect on Vinaconex's business results. In case CPC fails to complete restructuring works in 2011, Vinaconex's profit results in 2012 would be badly affected due to the corporation has to set up financial standby fund for the investment capital that was poured in CPC. At present, the investors were still in negotiation process for restructuring the Cam Pha Cement Co. Vinaconex would accept to suffer loss so as to withdraw capital in this company successfully because the corporation cannot handle the loss that may cause by CPC in 2012.

Source: www.intellasia.net/news/articles/business/111350936.shtml