Inundating losses may force Ha Bac Fertiliser out of business

May Ha Bac Fertiliser's losses even ate into the salary of its high-level executives

According to the audited financial statement published at the annual shareholders’ meeting on April 21, in 2017 Ha Bac Fertiliser suffered a loss of VND606 billion ($26.62 million), with which its accumulated losses increased to VND2.3 trillion ($101.03 million).

Besides, the firm reported decreases of VND200 billion ($8.78 million) in net assets, VND606.7 billion ($26.65 million) in equity, and the loss of 290 employees. Meanwhile, its total debts increased by VND406.6 billion ($26.64 million) to VND9.27 trillion ($407.2 million).

The bleak business results meant the leaders of the firm enjoy only a miniscule salary. Notably, the chairman of the board of directors received a salary of VND4 million ($175.72) per month, while the members of the Board of Directors received VND3 million ($131.79).

In the first quarter of this month, despite the firm’s revenue increasing by 36 per cent to VND684 billion, it still reported a loss of VND168 billion ($7.38 million). Ha Bac Fertiliser estimated that the total loss for the whole year will be VND720.6 billion ($31.6 million).

On July 26, 2017, Ha Bac Fertiliser made 272.2 million shares, representing a registered capital of VND2.71 trillion ($119.2 million), officially available for trading at the initial reference unit price of VND6,800.

However, after three months of listing, there were no transactions. As of the transaction session on April 26, the firm’s shares were valued at VND1,600, decreasing VND5,200 compared to the starting price.

In the framework of the shareholders’ meeting, the Board of Directors proposed a number of solutions to help the firm to escape from loss.

Notably, Ha Bac Fertiliser proposed the Ministry of Industry and Trade to ask Vinacomin to extend the deadline for coal payments, while simultaneously maintain coal supplies with at a lower selling price for the firm.

Besides, the firm requested the government to revise the value-added tax (VAT) for nitrogenous fertiliser to 0-5 per cent and revise the calculation method of export tax on nitrogenous fertiliser.

A subsidiary of state-run Vietnam National Chemical Group (Vinachem), Ha Bac Fertiliser specialises in producing urea fertiliser, which makes up 80 per cent of its revenue.

However, in recent years, the domestic demand for urea fertiliser fell far short of supply, leading to extreme imbalance. Besides, the domestic fertiliser manufacturing sector also needs to compete with imported products, especially cheaper Chinese ones.