Truong Ngan, a famous name in the coffee industry, one of the top 20 Vietnamese coffee exporters, has been encircled by debts. Seven big banks have been chasing for the company, asking to pay debts.

The movement of the coffee processors and exporters falling into insolvency began in late 2011, which is, in the eyes of analysts, the bad signal for the Vietnamese coffee industry.

In mid-2012, analysts for the first time mentioned the possible bankruptcy of Thai Hoa Group, one of the biggest coffee groups in Vietnam, which was believed to abuse short term capital to invest in long term investment projects.

Thai Hoa has had the eighth consecutive unprofitable business quarter. The Q1 finance report showed that Thai Hoa took the loss of VND37.9 billion in the quarter. The business result, plus the minus stockholder equity and the excess of short term debts over short term assets may lead to the fact that Thai Hoa would be forced to delist.

The accumulative loss Thai Hoa has incurred so far has reached VND660.4 billion. The short term debts of Thai Hoa alone by March 31, 2013 had reached VND2 trillion, higher by VND700  billion than the short term assets.

The figures about Thai Hoa’s debts and losses would not attract the special attention from the public, if Thai Hoa was just a normal enterprise.

The coffee group with a 17-year operation is one of the biggest groups in the field in Vietnam. In 2009, Thai Hoa’s Arabica exports amounted to 50 percent of the total exports of Vietnam, while its Robusta exports were on the third position, which brought the huge turnover of VND3.2 trillion.

Thai Hoa is the only enterprise which operates under a close process, from the cultivation, harvesting, processing, and providing services to exporting. Therefore, no one could imagine before that Thai Hoa would meet the misfortune one day.

AGC, Truong Ngan, INEXIM Dak Lak are believed to follow the big guys’ steps to fall into insolvency.

AGC, for example, in which Thai Hoa holds 52 percent of stakes, has had its shares delisted after it continuously took loss, which has led to the minus stockholder equity.

Dr. Le Xuan Nghia, a well-known economist, has noted a wave of medium and big enterprises sinking, including the ones in the farm produce and seacooking industry, the two key exporters of Vietnam.

In 2012, a series of big guys in the seafood sector fell down, namely Bianfishco, Thien Ma Import-Export Company, Dong Nam Seafood Company.

The coffee industry has also tasted the bitterness. A report said 24 small enterprises in the Central Highlands have shut down their business due to the insolvency. Bigger enterprises such as Vinacafe Da Lat, a subsidiary of VInacafe Vietnam, has also incurred big losses.

Even INEXIM Dak Lak, the first Vietnamese coffee company which joined the future market, has also reportedly met big difficulties.

The noteworthy thing is that the coffee companies, both small and big, still have incurred loss though Vietnam’s coffee exports have been increasing steadily since 2000. Especially, the country’s export turnover reached $2 billion in 2008.

Vietnamnet