Major banks’ capital stuck at ailing furniture firm

February 07, 2017 | 09:19

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Viet A Bank, Dong A Bank, and four other banks each have millions of dollars stuck in loss-making furniture firm Truong Thanh Furniture Corporation (TTF).

photo Le Toan

According to TTF’s 2016 fourth quarter financial statement, the company suffered a net loss of VND145 billion ($6.4 million) throughout last year.

The sales reached only VND263 billion ($11.6 million), down 67 per cent on-year. As the cost of goods sold is much larger than the sales revenue, the company racked up a gross loss of VND26.7 billion ($1.2 million) in the last three months of the year.

Revenues from financial activities decreased by 64 per cent, while financial costs doubled to VND64.9 billion ($2.9 million), which contains interest expenses of more than VND62.3 billion ($2.7 million). Besides, administrative expenses also increased by 20 per cent to VND33.5 billion ($1.5 million).

As of the end of 2016, TTF had a negative equity of -VND195 billion (-$8.6 million), total liabilities of VND3.4 trillion ($150 million), including VND2.6 trillion ($115 million) in short-term liabilities and VND30 billion ($1.3 million) in long-term liabilities.

The dominant loan type in TTF’s portfolio, short term loans were mainly provided by seven banks, reaching a total of VND933 billion ($41 million). TTF’s largest creditor is VietABank, with more than VND653 billion ($28.8 million), followed by DongA Bank with VND124 billion ($5.5 million). SHB and Kien Long Bank lent VND56.5 billion ($2.5 million) and nearly VND60 billion ($2.7 million), respectively.

According to TTF, all bank loans have been used as working capital to support production activities, which includes the expenses for wood raw materials and other input costs. At December 31, 2016, the interest rates charged by the banks ranged from 10.25 to 11 per cent for VND loans and from 5 to 6.9 per cent for loans in foreign currency.