Paraguay producer, Industria Nacional del Cemento (INC) reported a loss of PYG55.7bn last August, but the accumulated deficit now exceeds PYG1tn. The company, which for years has been in technical bankruptcy, must radically restructure in order to stay afloat, according to a report by local news agency, ABC.
Details of the financial management of the state company reveal that total liabilities at INC exceed PYG450,000m, including long- and short-term debt.
This situation is not new to the state cement company. Official data show that between 1989 and 2011, only seven fiscal years were profitable, compared to 16 years of losses. Consequently, the cumulative loss of the state-owned company rose to PYG1.17tn last June, ABC reports.
Until only recently, the company was reportedly losing more than PYG5000 for each bag of cement produced. After the final product price increase of PYG35,000 to PYG42,500 for retailers, this situation was reversed, but still the company’s financial situation remains critical.
In order to place the company on a more sustainable footing, the ParaguayanChamber of Construction (Capac) advocates the retention of the cement company in state hands, but calls for an injection of capital investment to increase its production capacity.
Other groups such as the Association of Building Professionals (Aprocons), however, point to the history of corruption and inefficiency of the state with regard to the cement sector. It therefore recommends greater involvement of the private sector, perhaps via a joint venture, as the only solution to the company’s critical situation.