GELEX heading towards the modern management model

In the last three years, Vietnam Electrical Equipment Joint Stock Corporation (Gelex) has made a breakthrough and flourished, becoming “big” on the HOSE and quickly entering the list of businesses with trillions in profit.

Although officially listed at the beginning of 2018, Gelex had earned recognition as one of the top 50 listed companies in Vietnam by Forbes, among the few companies in the index basket of both FTSE Vietnam Index and VanEck Vectors Vietnam ETF.

Powerful restructuring

In 2016, Gelex earned VND 7,297 billion in revenue, and VND 772 billion in profit before tax. In 2017, the company earned VND 11,984 billion in revenue, and VND 1,145 billion in profit before tax. The growth rates in 2017 and 2016 in terms of revenue and profit before tax were 64.23% and 48.35%, respectively.

In 2018, the total accumulated revenue for 9 months alone reached VND 10,049 billion, profit before tax exceeded VND 1,000 billion, increasing by 15.9%, and especially the profit after tax in 3 quarters was striking with an increase of 51.2% over the same period in 2017. The growth trend of Gelex showed remarkably positive results.

This groundbreaking growth was attributed to an effective restructuring strategy in the electrical equipment segment and the expansion of investment into other potential segments such as Utilities (including energy and clean water), Logistics, and Real estate.

Following the initial success of the restructuring, Gelex’s Board of Directors had the determination to confidently continue to accelerate the restructuring process according to the Holdings model with the goal of optimizing the allocation of resources within the group, thereby creating stronger and more efficient development overall.

As evaluating the road map of comprehensive restructuring for 3 years, the Gelex leadership representative said that there were various points that need further improvement in order to bring about optimal efficiency.

Thus, Gelex continued to focus on restructuring in 4 main segments, which were Industry with the orientation of perfecting the electricity ecosystem, consisting of power generation, power transmission, electricity distribution and electricity consumption from low, medium to high voltage; Utilities including energy and clean water; Logistics and Real estate.

To implement the strategy, Gelex had planned four main business segments according to the model of its parent company GELEX, which functioned as a holding company – specialized in managing capital contributions in business units.

With this model, the parent company Gelex promoted the autonomy in the production and business activities of its subsidiaries. The parent company Gelex focused on building standards for modern business administration, system-wide risk management and human resource development.

An example of modern administration making it easier for Gelex to improve management efficiency is that its 4 subsidiaries, namely Gelex Electrics LTD, Gelex Energy LTD, Gelex Logistics LTD and Gelex Land LTD were all operated by members of the BOD specialized in their respective businesses.

Financially, the asset ownership model would help the parent company GELEX focus on coordinating, mobilizing and using capital in the most effective way across the Corporation’s system through the management of cash flow and money demand of each group/company of Gelex. In addition, for the investment appraisal of large projects, setting the implementation priorities for projects would help ensure optimal use of capital in the system, thereby providing an efficient circular flow of investment for Gelex.

Taking industrial production as the core

In order to implement this restructuring strategy as well as optimize production and management, following the restructuring road map in 2018, the parent company Gelex transferred its capital contribution in the subsidiaries which were in electrical equipment segment, namely Vietnam Electric Cable Corporation, Electrical Equipment Joint Stock Company, and Hanoi Electromechanical Manufacturing Joint Stock Company to Gelex Electric Devices Co., Ltd.

Gelex Electric had gradually increased its percentage of ownership in CAV, THI, and HEM to 100%, enabling Gelex to quickly implement its development strategies in the electricity segment and bring greatest benefits to Gelex.

With the model of a corporation taking industrial production as the core, the parent company Gelex had directed to focus on building the R&D team at Gelex Electric, setting up a technology fund throughout the system to encourage creative thinking, develop new high-voltage products that were then imported.

In addition to promoting internal growth, Gelex Electric was also gradually increasing the percentage of ownership in Dong Anh Electrical Equipment Corporation to complete its product value chain.

In Logistics segment, which was identified as a segment with great potential, Gelex focused on promoting the operations of South Logistics Joint Stock Company (SOTRANS) with the goal of putting SOTRANS into Vietnam’s top 3 companies with the largest closed logistics chain.

The Corporation will also focus on long-term investment in Utilities segment. This segment produced and sold essential products for people and economic development with high level of safety for stable income. It was oriented that until 2025, 800 MW of renewable electricity would be developed, which mainly included solar and wind power.

As for Real estate segment, Gelex was then completing the necessary legal procedures for projects formed on the basis of the land bank of Gelex and its member businesses, so there were not many resources used.

According to the plan, the real estate segment would begin to thrive in the period of 2020-2025, contributing to Gelex’s large revenue and profit at the time.

It was easily observed that Gelex was growing ever stronger. The goal of Gelex was to maintain the No. 1 position in the group of enterprises of the same segment, retain its reputation of the national brand, and reach out to the region and the world.

On 20 December, Gelex was honored to receive the National Brand award for the third time in a row, period 2018-2020, at Hanoi Opera House.