By the end of November, Cam Pha Cement Plant project, the largest investment project that Vinaconex Joint Stock Corp has reported suffering accumulative loss of VND1.6trn (US$76.8m), 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 VND500 billion (US$24m) 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.