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State owned Thai Nguyen Iron and Steel faces bankruptcy in Vietnam

Steel News - Published on Wed, 10 Apr 2019

Image Source: vnexpress
VN Express Net reported that saddled with debts it cannot repay, state-owned Thai Nguyen Iron and Steel Jsc is on the verge of bankruptcy. In a recent letter to shareholders, Thai Nguyen Iron and Steel Jsc said it is facing a financial crisis which could lead to bankruptcy if it is not saved by the government, banks and other authorities. It said “The charter capital of the company, one of the largest steel producers in Vietnam, was VND 1.94 trillion (USD 83.6 million) last year but owner’s equity accounted for only 18%, which the company regards as a low ratio. With liabilities 4.65 times owner’s equity, TISCO said its capital structure is unstable. The company added it needs to increase owner’s equity and recover bad debts. The bad debts climbed to almost VND 852 billion (USD 36.7 million) last year, of which the company said 46 percent could be recovered.”

One of the problems the company has been facing is the delay in a stop-start expansion project. The project first began in 2007 but stalled soon afterwards due to the global economic crisis. The original cost of expansion of VND 3.84 trillion (USD 165.5 million) was increased to over VND 8.1 trillion (USD 349 million) on the suggestion of Chinese contractors when it was restarted in 2009. But in 2012 it stalled again when TISCO faced a resources crunch, causing the China Metallurgical Group Corporation to withdraw from the project. TISCO had paid MCC 92 percent of the contract value at the time, but much of the work was left incomplete, according to the Government Inspectorate. Machinery and equipment MCC delivered had rusted and become damaged after lying unused for long.

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Posted By : Ratan Singh on Wed, 10 Apr 2019
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