Founded in 1965, Habac Nitrogenous Fertilizer led Vietnam’s nitrogenous fertilizer industry. Despite financial losses after expanding production in 2015, the company returned to profitability in 2021, thanks to government support and business community determination. The Prime Minister-approved Business Restructuring Project in 2023 has fostered optimism and marked a new development phase for Habac Nitrogenous Fertilizer.
Prime Minister Pham Minh Chinh works with central authorities to devise strategies for overcoming challenges and impediments faced by Habac Nitrogenous Fertilizer Company, August 2022
Fruits from breakthrough efforts
Apart from general hardships in 2023, Habac Nitrogenous Fertilizer also had its own unique nuisances. Prices of raw materials, fuels and other inputs, especially coal, have kept growing up while selling prices of urea and NH3 fertilizers have decreased sharply (by 40 - 45% compared to 2022). Moreover, insufficient and unstable electricity supply caused the company to reduce production loads and unexpectedly stop production lines, thus suffering huge losses.
Before this reality, the company has adopted many solutions like balancing production loads; flexibly operating equipment; conducting research on automatic grid switching system; and applying many technical solutions for each stage and part of the entire chain system to reduce input and fuel consumption. As a result, the company managed to reduce VND95 billion as compared to the planned amount. The company also reasonably maintained its production lines and boosted competitively tendered procurement of inputs, freight and services. This helped the company reduce VND10 billion of cost.
Habac Nitrogenous Fertilizer has proactively harnessed pertinent information to implement suitable sales strategies, thereby maintaining its distribution network and market share while ensuring substantial profitability. Specifically, amid global and domestic fierce competition, selling prices of urea fertilizers are more effective than those of NH3 fertilizers. Hence, the company exported more than 55,000 tons of urea fertilizers for over US$22 million, the highest ever value. FEC also fostered measures to effectively balance financial flows, actively worked with banks to lower loan interest rates, and focused on repaying the principal of VND278 billion to reduce interest costs. At the same time, the company reviewed and issued more than 70 working regulations and business regulations to improve its operating performance.
Prime Minister Pham Minh Chinh conducts a working visit to Habac Nitrogenous Fertilizer Company, August 2022
Moreover, the company actively coordinated with Vietnam Chemical Group, Vietnam Development Bank and central agencies to research and complete the business restructuring project, which was approved by the Prime Minister (in Decision 118/QD-TT dated December 19, 2023). The project opened up a way to overcome difficulties and create a premise for improving business performance in the coming years, helping workers feel excited and feel secure in their work.
Mr. Nguyen Duc Ninh, General Director of Habac Nitrogenous Fertilizer, said: By consistently and effectively carrying out solutions, in 2023, Habac Nitrogenous Fertilizer continued to achieve significant outcomes. The company manufactured 452,168 tons of urea fertilizer equivalents, sold 471,200 tons of urea fertilizer equivalent (highest-ever), and earned VND4,435 billion of revenue, equal to 96% of the plan. Especially, the company made a profit of VND858 billion, the third profitable year in a row. This helped improve employees’ income and contributed to the overall success of the parent group.
Remarking on the company's optimistic changes, Mr. Dang Quyet Tien, Director of the Corporate Finance Department (under the Ministry of Finance), said: This is a long process, led by the effort of Vietnam Chemical Group as well as Habac Nitrogenous Fertilizer and Chemicals Joint Stock Company. Hopefully, with effective policies and mechanisms, especially with the financial restructuring plan resolved, Habac Nitrogenous Fertilizer will further sharpen its competitiveness and produce and do profitable business.
Improving product and service quality
The good business performance in recent years results from the company’s continuous application of modern technological and scientific research into production. For example, Habac Nitrogenous Fertilizer applied microbial coating for inorganic fertilizers, added nano micronutrients and adopted coating technologies to prevent nitrogen loss to make new eco-friendly urea fertilizer product lines for various crops and plants like Urea N46TE, Urea N46+ and Urea N46+ TE Sil. The company also applied technical advances to increase labor productivity and improve economic efficiency like system calculation, design, and installation and conveyor system manufacturing and installation.
Habac Nitrogenous Fertilizer’s production facility
Habac Nitrogenous Fertilizer also focused on raising service quality in marketing stages. The company set up a telephone hotline for customers to send feedback, answer questions and handle complaints promptly; reviewed and reorganized appropriate marketing systems and increased trained human resources and new elements for sales teams.
Building and upholding the corporate culture has been an important activity in the past years. The company not only strengthened good relationships among employees and built a healthy working environment but also complied with communication standards at work; arranged the working space neatly and cleanly; and handled activities in time.
In the coming years, Habac Nitrogenous Fertilizer will strive to maintain its position as a leading producer and trader of fertilizers in the country, with a yearly output of 450,000 tons of urea fertilizer equivalents. To successfully realize this goal, the company will continue to lead advanced scientific and technological innovation and application to manufacture good fertilizers for various types of crops and soils. The company hoped that the government and central agencies would accelerate the removal of obstacles to business development, especially with suitable VAT tax (imposing a duty of 0-5% on fertilizers instead of zero VAT) to create fair competition between domestic fertilizers and imported fertilizers.
By Thanh Loan, Vietnam Business Forum
Vietnamese
October 2024
Hanoi