In the first half of the year, Vinachem recorded a revenue of VND21.336 trillion ($927.65 million), down 4 per cent on-year. Gross profit was VND3.31 trillion ($143.91 million), down 5.7 per cent, with a gross profit margin of 15.5 per cent.

The financial revenue increased from VND195 billion ($8.5 million) to VND333.7 billion ($14.5 million), however, financial costs, as well as the cost of sales, also increased by 8 and 4.5 per cent to VND1.34 trillion ($58.26 million) and VND1.25 trillion ($54.35 million), respectively.

As of the end of June, the total capital of the group was VND55.74 trillion ($2.42 billion). Particularly, loans were over VND26.6 trillion ($1.16 billion). Undistributed after-tax profit was negative VND2.72 trillion ($118.26 million).

The auditing firm emphasised that some of Vinachem's overdue loans consisted of VND668.9 billion ($29.1 million) in principal and VND336 billion ($14.61 million) of overdue interest and late payment fees.

The asset guaranteeing the loans is a nitrogenous fertiliser plant from coal dust with a capacity of 1,760 tonnes of urea a day, temporarily handed over to Ninh Binh Nitrogenous Fertilizer to manage and operate in 2012 but so far the transfer has not been fully completed yet, putting the debts and loan interests on the shoulders of Vinachem.

Vinachem said that in 2018, the Ninh Binh fertiliser project suffered a loss of VND913.5 billion ($39.72 million), and accumulated losses exceeded the VND2.65 trillion ($115.22 million) equity. Short-term debts amounted to VND7.54 trillion ($327.83 million) while short-term assets were only VND942 billion ($40.96 million). Since the project was put into operation, it has been facing cashflow difficulties to repay the loans taken up for the initial investment and short-term loans for production and business.

Some of Vinachem projects, such as the project of mining and processing rock salt in Nongbok district (Khammouan province, Laos), have stopped implementation and are carrying out procedures to liquidate contracts with related parties.

Exacerbating Vinachem's troubles, the giant has been having several of its bank accounts and share holdings frozen by the court due to litigation over unpaid sums. Specifically, Chemical Industry Engineering JSC (CeCo) sued Vinachem at the Vietnam International Arbitration Centre (VIAC), requesting a payment of $12.48 million. TTCL Vietnam Corporation Ltd. and TTCL Pcl. (TTCL) also asked Vinachem to pay $18.3 million and $110.4 million.

On January 1, Hanoi People’s Court applied emergency measures to temporarily halt BIDV's advance payment of a $8.4 million guarantee to Vinachem to wait for the decision of VIAC. Vinachem sent a complaint but was rejected.

On February 20, Ho Chi Minh City People’s Court temporarily froze Vinachem's 12.17 million shares in Binh Dien Fertilizer JSC (code BFC) and its USD account at BIDV with $13 million in balance.

On April 4, Ho Chi Minh City People’s Court decided to issue further temporally emergency measures to freeze Vinachem's 24 million BFC shares, 10 million shares of Lix Detergent JSC (LIX), and 7.5 million shares of Viet Tri Chemical JSC (code HVT).

Vinachem currently holds 37.1 million BFC shares, 16.5 million LIX shares, and 7.5 million HVT shares. VIR

Tan Duong