VIB stands behind the top instant noodle producer UNIBEN's success

Based on the report in 2016 of Kantar Worldpanel market research firm, 3 Mien instant noodle brand, a brand under UNIBEN company had surpassed a series of strong competitors in the market such as Gau Do, Hao Hao and Kokomi to hold 27.4 per cent of the rural areas' market shares.

As a result, UNIBEN has become one of the largest instant noodle producers in Vietnam together with Acecook, Masan and Asia Foods.

The company has their great leaders to thank for their success. In particular, Dang Khac Vy, Chairman of the Board of Directors of Vietnam International Commercial Joint Stock Bank (VIB) plays crucial role.

In Russia, Vy has been known as the owner of the Mareven instant noodle brand, which belongs to the Mareven Food Central, the largest instant noodle producer in Russia and also one of the largest private companies in the country.

Returning to Vietnam, Vy continued to show ambition in the instant noodle industry through UNIBEN. Although Vy does not directly own UNIBEN, he has always been a major source of finance for the company.

Since 2010, UNIBEN has used inventories, machinery, construction workshop, etc. as collateral at VIB in many occasions.

For instance, in 2014, the whole line of equipment and machinery of UNIBEN's factory in Hung Yen province was registered as collateral at VIB with a value of $18.9 million.

UNIBEN's factory in Hung Yen province was completed in 2016 with the investment of $43.4 million.

The large investment amount in the factory has led to a sharp increase in UNIBEN's loans amounting to $21.7 million by the end of 2016. At the same time, UNIBEN also had to increase its equity by $21.7 million, reaching roundly $39 million. 

Expanding production capacity brought UNIBEN its initial success when the company's market shares in the rural areas increased tremendously. Additionally, UNIBEN's revenue in 2016 reached $106.4 million, an increase of nearly 10 per cent compared to 2015.

While the growth of Uniben’s revenue was impressive, the company’s profits were extremely modest. In particular, UNIBEN's post tax profit for 2016 was only $174,000, slightly lower than the previous year and even much lower than the profit of Miliket, an effete brand.

UNIBEN's real profit has mainly come from the financial activities, specifically, UNIBEN's revenue from financial activities reached $6.7 million.

UNIBEN's results have shown the fiercely competitive domestic market. In the context of declining sales and more coming competitive brands, a lot of businesses had to sacrifice its profit.

Since the investment cost exceeds the profit, UNIBEN has to face financial pressures when its interest expenses are rising day by day. In 2016, the company paid nearly $1.7 million for bank loan interest. Despite this difficulty, UNIBEN recently started establishing a factory in Binh Duong province, which is expected to be completed by the end of this year.

Similar to the factory in Hung Yen province, the instant noodle line, warehouse, shelves, forklift systems and other auxiliary equipment in Binh Duong factory worth $8 million have been registered as collateral at VIB.

The new factory of UNIBEN in the South will definitely boost the production capacity and the competitiveness of the company in the cutthroat instant noodle industry with competitors like Acecook or Masan Consumer.