How did Thaco overcome Covid-19 to develop agriculture?

Thaco Corporation not only invests in argiculture with THAGRICO but also actively supports Hoang Anh Gia Lai Corporation via HAGL Agrico – HNG, where it holds 35% shares, making the equivalent of VND 3,890 billion. It also creates favorable conditions for Hoang Anh Gia Lai in capital funding to reconstruct HNG’s operation. Initially, the effectiveness of the cooperation has revived HNG gradually.

On June 4, HNG's 2021 Annual General Meeting of Shareholders was held at Sofic Building - Ho Chi Minh City in an online form. Tran Bao Son - Member of the Board of Directors, General Director of HNG reported on the business results in 2020 and the period of 2020 and earlier, as well as presented the business plan from 2021 to 2023.

How did HNG overcome the complicated Covid-19 pandemic in 2020?

In 2020, banana output reached 195,694 tons while that of other fruits and latex were 3,988 tons and 7,913 tons respectively. HNG’s revenue was VND 2,375 billion while it recorded VND 910 billion in a loss regarding business and production activities. The transferring of the HNG company took place before one leg of An Dong Mia Vietnam company (which owns Lumphat company in Cambodia) which was out of four company that has agreed to sell to THAGRICO, for a profit after tax in 2020 of VND 21 billion.

As of December 31, 2020, the debt increased to VND 2,448 billion, the total debt was VND15,990 billion, the accumulated loss was VND2,306 billion, the company's charter capital was VND 11,085 billion.

By 2021, the total remaining land area of ​​HNG was 35,749 hectares while that in Laos was 27,376 hectares. The total banana area in 2021 was 4,257 hectares and 200 hectares of pineapples are being harvested.

However, the shortage of capital leading to the shortage of agricultural materials and manforce. As a result, the orchards suffered from a decrease in yield and quality. On the other hand, there was a water shortage for orchards as the irrigation system did not meet the technical requirements leading to the reduction in harvest output and quality of agriculture products; rubber area was 17,308 hectares, but latex exploitation area was recorded at only 6,807 hectares, the remaining was stunted rubber and bare land.

In North Cambodia, there are two companies of HNG with a total area of 8,373 hectares, of which 476 hectares for bananas,1,244 hectares for mango, and jackfruit lack water and are severely damaged. The remaining land area is mainly rubber, bare land, rocky hills, and slopes. Traffic connection is difficult, so harvesting and transportation costs are high.

What are opportunities for HNG in 2021?

With the aforementioned difficulties, the operation plan for 2021 of HNG was regulated to meet the new situation.

In terms of cultivation and production: The company will focus on caring for and renovating existing orchards, giving priority to the use of organic fertilizers to improve soil and improve the quality of 4,733 hectares of banana, 158 hectares of Pineapple, 3,424 hectares of Mango, and 6,807 hectares of Rubber for latex extraction.

Regarding technical infrastructure: New investment in irrigation system including main pumping stations; plumbing/canal system; system of intermediate reservoirs and irrigation ponds. New investment and upgrading of power lines, substations, and main traffic axes in the farm to serve the urgent needs of production.

Regarding works on land: Investing in packing factory and cableway trolley banana roller, housing areas for workers, officials, and employees of factories. Investing in agricultural machines and equipment to plant new trees and take care of orchards. Investing in motor vehicles for constructing traffic infrastructure and irrigation. Investing in means of transportation for agricultural materials, fruits, and employee shuttles.

In finance: At an extraordinary general meeting in HCM City on January 8 shareholders of Hoang Anh Gia Lai Agriculture International JSC (HAGL Agrico) approved an increase in the company’s capital by VND7.414 trillion issuing 741.4 million shares to Truong Hai Agriculture Company (Thagrico), a subsidiary of automaker THACO. Paying VND 1,914 billion for due debt, of which debts relating to companies of Hoang Anh Gia Lai Group were VND703 billion.

The expected plan for production, business, investment, and financial structure in 2021 including 96,063 tons of bananas, 4,424 tons of pineapples, and 5,020 tons of other fruits in harvest output; rubber latex output is 6,548 tons; revenue in 2021 is estimated at VND1,465 billion, VND84 billion in loss and the total investment will reach VND1,024 billion.

A positive outlook for 2022-2023?

Thaco and Hoang Anh Gia Lai corporation are determined to promote the operation of HNG in the coming years.

They target to continue to perfect the master plan and synchronously invest in technical infrastructure (irrigation, electricity, traffic), works on land (packing factories, housing for workers, …, general warehouse, mechanical center). Organize transportation activities in agricultural complexes.

Focus on taking care of existing orchards to increase output, quality, and economic efficiency. Evaluation and conversion of inefficient orchards to grow fruit trees of high value and high market demand. Maintain and expand export markets of fresh and processed fruits to target markets.

HNG will cooperate with partners with technology and techniques in the field of agriculture and large distribution systems to develop new planting areas of key fruit trees (banana, pineapple, mango).

HNG also continues to invest in barns, raising reproductive cows and beef cattle under the model of selling grazing in rubber plantations or converted bad fruit (mango) orchards.

In terms of management, HNG will organize production management to ensure a sufficient number of workers, technicians, and managers according to the structure, organization chart, and staffing through on-site human resource development (workers, team leaders, technical staff), with appropriate recruitment, training, and policies.