Brian Jeffrey
Loc Troi Group, once a prominent player in the agricultural sector known for its strong profitability, is currently facing significant losses and charges of financial irregularities. This company, which has been dubbed a “cash-printing machine” for over three decades, is now entangled in substantial debt and controversies, including large debts owed to local farmers.
Allegations have been made against the former CEO, Nguyen Duy Thuan, who led the company from May 2020 until his termination on July 15, for fraudulent activities that breached legal norms, leading to major financial setbacks. Loc Troi is urging authorities to take action against Thuan to prevent further issues.
In a statement to the media, Chairman Huynh Van Thon, born in 1958, admitted to the company’s errors in choosing its leadership, remarking, “We were engaged in a battle where an insider infiltrated deeply.”
As for Nguyen Duy Thuan, he has not responded publicly, asserting that “time will reveal the truth.”
Founded in 1993 as An Giang Plant Protection JSC, Loc Troi started with a focus on plant protection products and was privatized in 2004, continuing under its current name.
For years, plant protection products were the company’s key revenue source, making up almost all profits before 2011 and maintaining a strong revenue base through a partnership with Syngenta, a top global agrochemical company, until 2021.
With profit margins reaching up to 30% from this division, Loc Troi enjoyed consistent profits and a healthy cash flow for many years.
The company began diversifying into rice in 2011, initially generating limited income. However, by 2015, revenue from rice soared to approximately 2.915 trillion VND, constituting 36.3% of the company’s overall revenue of nearly 8.027 trillion VND.
Simultaneously, the revenue from plant protection products decreased from 5.347 trillion VND in 2014 to 4.170 trillion VND in 2015, resulting in a reduction of its share of total revenue from 59.5% to under 52%.
Despite this transition, Loc Troi remained profitable due to its ongoing partnership with Syngenta. However, the pivotal moment came in 2021 when the collaboration ended, leading to a sharp decline in profits, with the company reporting multiple losses in 2023 and 2024; it has also been accused of owing hundreds of billions of VND to farmers in An Giang and various Mekong Delta areas.
Throughout Nguyen Duy Thuan’s CEO term, Loc Troi expanded quickly, increasing its revenue, assets, and debts. The rice sales surged from 6.431 trillion VND in 2022 to 11.323 trillion VND in 2023, yet the sales of plant protection products fell from 4.403 trillion VND to 4.219 trillion VND, decreasing its share of total revenue from over 37% to 25.5%.
Additionally, despite increasing borrowings and the instability of rice prices along with fluctuating exchange rates, the company made significant financial investments. Its 2021 audited report indicated a 100 billion VND investment with VinaCapital Fund Management JSC and 12 billion VND in bonds from Viet Capital Bank at an interest rate of 8.5% per annum. By the end of 2021, Loc Troi held 105 billion VND in bonds from HDBank.
Loc Troi entered the rice market following a spike in global rice prices in 2008, aiming to create a comprehensive supply chain that offered seeds, agricultural inputs, technical assistance, and eventually rice processing and export.
However, the company’s increasing emphasis on rice has yielded mixed outcomes. Revenue may have doubled from 2020 to 2023, but gross profit margins fell from above 20% in earlier decades to around 15%. Interest expenses have surged, adding to the financial strain.
At the shareholders meeting in 2024, Loc Troi suggested raising more capital, but many risky proposals were turned down.
Even though the rice business expanded, the decline in plant protection product sales—the once-reliable cash cow—negatively impacted overall profits.
When rumors began circulating in late 2021 about Syngenta’s withdrawal from its partnership with Loc Troi, the stock plummeted. At that time, Thuan played down the concern, claiming that rice was the predominant revenue stream while plant protection products took a back seat. The 2021 financial report confirmed this shift.
While Syngenta’s sales constituted 30% of Loc Troi’s plant protection revenue, equal to about 10% of total annual revenue, the company had been reorienting itself toward broader agricultural services.
Nevertheless, the rice sector is a low-margin and high-risk arena for Loc Troi. The company reported substantial losses in early 2024 due to high borrowing costs, currency volatility, and the challenge of prepaying farmers at 0% interest while borrowing at elevated rates from banks.
The rice price increases in 2023 did not match the 2008 crisis, leading to a predicament for Loc Troi as domestic rice prices surged while pre-signed export orders at lower rates resulted in considerable losses. Early 2024 saw sharp declines in Vietnamese rice export prices.
Amidst this turmoil, Vietnam Fumigation JSC (VFG), part of PAN Group and supported by financial tycoon Nguyen Duy Hung (SSI), intensified its commitment to plant protection products. Following Syngenta’s departure, it became a strategic investor in VFG in January 2022, propelling VFG’s growth.
Despite having a smaller asset base of 2.945 trillion VND, VFG achieved revenues exceeding 3.557 trillion VND in 2023, up from 3.251 trillion VND in 2022, with nearly 296 billion VND in profits. VFG maintained its upward trajectory in the first half of 2024 with revenues over 2 trillion VND and profits topping 160 billion VND.
In stark contrast, Loc Troi recorded severe losses during the first quarter of 2024, with no second-quarter financial reports made available yet.
