MOF inspected the observation of laws on finance, accounting regime and tax at Vicem and three subsidiaries last July.

The long-term financial investment of the holding company was VND13.973 trillion as of December 31, 2023. The amount of capital was invested in 31 companies, including 17 subsidiaries, 10 joint ventures and affiliates, and four other companies, accounting for 93 percent owner’s equity.

MOF has found that some investment deals contain the risk of getting lost.

By December 31, 2023, the holding company had provisioned VND3.017 trillion against risks for seven investment items.

Vicem had invested VND1.132 trillion in Vicem Tam Diep, incurred the accumulated loss of VND1.126 trillion (99.5 percent of contributed capital), and provisioned VND1.069 trillion against risk. The business is experiencing capital imbalance and low debt payment capability. Vicem has helped the company borrow VND396 billion to make payment for due debts.

At Vicem HaiVan, the invested capital had reached VND314 billion (75.75 percent of chartered capital). By the end of 2023, the company had incurred a loss of VND64 billion, and provisioned VND34 billion.

At Ha Long Cement JSC, Vicem’s investment capital had climbed to VND1.606 trillion. In 2023, it took a loss of VND648 billion, while the accumulated loss hit the VND4.902 trillion threshold. Its stockholder equity had become minus (-) VND2.96 trillion, and the provisioned amount had reached VND1.605 trillion.

The inspectors concluded that the company ‘is continuously taking a loss, while its finance fell into the state of serious imbalance, unable to pay due debts, facing a risk of having to temporarily stop operation because of lack of cash flow’.

At Vicem Song Thao, the capital that Vicem had poured into the company was VND516 billion (80.79 percent of charter capital). Its accumulated loss by the end of 2023 was VND312 billion, and provisioned amount VND252 billion.

At Song Da JSC, Vicem had invested VND12 billion, incurred a loss of VND3.4 billion in 2023 and had accumulated loss of VND232 billion, and provisioned VND10.2 billion against risks. The inspectors also found signs of financial insecurity.

At Dong Nai Roofsheet and Construction Material JSC, the investment capital had reached VND43.6 billion. It took a loss of VND99 billion in 2023, incurred the accumulated loss of VND788 billion, and provisioned VND41 billion.

As for Dong Nai - Kratie Rubber JSC, Vicem had injected VND96 billion into the company, made a profit of VND13 billion in 2023, but had incurred the accumulated loss of VND179 billion, provided VND4 billion.

In addition to the seven big investment items, Vicem has also invested in nine subsidiaries and affiliates and the subsidiaries have also reported losses in 2023. However, the companies still have stockholder equities higher than the investment capital.

The MOF’s conclusion requests Vicem and three subsidiaries to pay additional tax to the state, totaling VND11.9 billion, including VND4.7 billion in corporate income tax and VND532 million in VAT.

Of this, Vicem Hai Phong has to pay additional corporate income tax (CIT) of VND3.18 billion, Vicem Ha Tien VND1.52 billion in CIT and VND532 million in VAT related to illegal sale promotion programs. The holding company has been requested to pay VND6.69 billion additionally to the state budget.

MOF has requested Vicem and inspected businesses to assess their financial investments in unprofitable businesses; and instruct officers representing Vicem’s contributed capital in enterprises to request the boards of directors of the company to design solutions to solve the financial problems, fix prolonged accumulated loss, and avoid capital and state’s asset loss.

Inspectors have also requested Vicem to immediately implement reasonable financial supervision over businesses with signs of financial insecurity.

Regarding Vicem’s production and business situation, in the first six months of the year, it put out 7.63 million tons of clinkers, or 45.1 percent of the 2024 yearly plan, a decrease of 7.8 percent compared with the same period 2023. Meanwhile, the cement output reached 9.77 million tons, or 45.4 percent of the plan, down 7.2 percent.

The Ministry of Construction’s report on the implementation of tasks in the first six months and the business plan for the second half of the year showed that Vicem reported a loss of VND863 billion in the first half, or VND4.7 billion, a day.

Meanwhile, Vicem's audited consolidated financial statements showed that in 2023, this enterprise's after-tax loss was up to VND1,129 billion, while in 2022 it made a profit of nearly VND642 billion.

Manh Ha