Ciencos deeply in the mire

The report shows that despite economic hardships in 2011, 23 out of a total 27 state groups and corporations being audited still posted profits.

Of four remaining units bogged down in losses, transport sector’s Civil Engineering Construction Corporation 8 (Cienco 8) ranked second with approximately $138 billion ($6.6 million) losses, which was eight times more than Military Petroleum Corporation which ranked third.

Head of SAV’s General Department Dao Van Dung said Cienco 8 was one of the firms whose loosened management of debt collections had led to huge capital appropriations from their business partners. Cienco 8 had reported over VND44 billion ($2.1 million) worth in past-due receivables.

Besides, Cienco 8 did not have a specific receivable management scheme for application in the whole system as well as require member units to make loss provisions.

The report also shows Cienco 8 and Cienco 4 had almost used loans to retain operations. Accordingly, Cienco 4’s debts were tantamount to around 90 per cent of its total capital against 70 per cent average rate.

For Cienco 8, debts were 7.3 times against its equity, of this past-due debts were over VND73 billion ($3.4 million). Besides, many its member units incurred debts which were from 11 times to 42 times bigger than their equity amounts.

In early 2012, Cienco 8’s member businesses were reported to owe state budget nearly VND133 billion ($6.3 million).

In late 2012, the Ministry of Finance (MoF) rendered a general report on performance of  91 state groups and corporations in 2011 which showed transport sector’s Ciencos took the lead in both outstanding debt amounts and past-due receivable collections.

Accordingly, many Ciencos were named among 30 state groups and corporations whose debts over equity surpassing three times, impinging on state regulations.

Of them, past-due debt of Cienco 1 was 21.8 times against its equity and that of Cienco 8 was 16 times, ranking second and third in top 10 businesses saddled with debts.

Meanwhile, Cienco 6 incurred overdue debts reaching VND128 million ($5.7 million), making it one of a few businesses with largest overdue debt amounts in 2011.

With unhealthy financial situation, in early 2012 Cienco 1 had suffered accumulated losses amounting to VND35 billon ($1.7 million) and that of Cienco 6 was VND27 billion ($1.3 million).

By the end of 2011, Cienco 5’s parent company reported VND908 million ($43 million) in would-be-collected debts, tantamount to 79 per cent of its total asset, the figure for Cienco 8’s parent company was VND1.043 trillion ($49.6 million), equal to 67 per cent of its total asset.