Staff cuts, social insurance debt, tax debt.
Minh Long I Co., Ltd. is one of the leading names in the ceramics industry, especially in the fine art sector. Minh Long I products are positioned in the high-end segment, becoming luxurious gifts at many major conferences.
Despite overcoming the Covid-19 pandemic, in 2022, Minh Long I recorded very strong growth in both revenue and profit. Revenue from sales and services reached VND 1,123 billion, an increase of VND 382 billion, equivalent to 51.6%. Net profit after tax in 2022 reached VND 13.8 billion, an increase of VND 12.3 billion, equivalent to 820% compared to 2021.
In that context, Minh Long I surprised everyone by cutting staff, accumulating tax arrears, and failing to pay social insurance contributions.
Specifically, as of December 31, 2022, Minh Long I had a total workforce of 2,517 people, a decrease of 55 people compared to the end of 2021. Notably, despite the reduction in personnel size, the company increased remuneration for its leadership team. In 2022, Minh Long I recorded salaries and income for the Board of Directors of nearly 7 billion VND, a slight increase compared to 6.7 billion VND in 2021.
In 2022, despite strong revenue and profit growth, Minh Long I cut staff, accumulated social insurance debts, and defaulted on taxes. (Illustrative image)
Along with the increase in executive salaries, there was also an increase in salaries for media personnel. During the period, Minh Long I's short-term prepaid expenses for advertising and media increased from 0 VND to 7.8 billion VND. Despite spending a lot on advertising, Minh Long I had not yet fulfilled its tax obligations at the end of 2022.
Minh Long I's current income tax expense for 2022 was 3.1 billion VND. However, the corporate income tax paid by the company was only 940 million VND.
As a result, as of December 31, 2022, Minh Long I recorded a tax and other payments due to the State of VND 7.1 billion, a significant increase compared to VND 1.4 billion at the beginning of 2022.
In addition, the company has VND 19.2 billion in payables to employees. The company recorded VND 4.5 billion in social insurance payables and VND 37.5 million in trade union fees.
Assets are formed primarily from… debt.
Minh Long I is a company with a large capital base of 700 billion VND. After decades of operation, the company has accumulated equity capital of 820 billion VND. However, Minh Long I's capital is modest compared to its debt.
As of December 31, 2022, Minh Long I's liabilities amounted to VND 2,046 billion, 2.5 times higher than its equity and accounting for 71.4% of its total capital (assets). It is clear that the majority of the company's assets are financed by debt.
Of that, debt accounts for the largest proportion, reaching 64.9% of total assets (equivalent to VND 1,860 billion). In addition to borrowing nearly VND 1,000 billion from shareholders, Minh Long I also borrowed from banks.
The list of institutions that provided loans to Minh Long I includes Asia Commercial Bank (ACB) Binh Duong Branch (246 billion VND), Vietnam Foreign Trade Bank (Vietcombank) Binh Duong Branch (335 billion VND), and Vietnam Industrial and Commercial Bank (VietinBank) Binh Duong Branch (268 billion VND).
At the end of 2022, Minh Long I settled all its loans at Military Commercial Joint Stock Bank, Binh Duong Branch (MBank) and the Social Policy Bank.
Assets worth 2.866 billion, cash down to only 18.4 billion: Where did the money go?
Minh Long I's cash flow is also noteworthy. At the end of 2022, the company's total assets reached VND 2,866 billion, but the cash and cash equivalents figure was only VND 18.4 billion, down from VND 26.2 billion at the beginning of the year. Of this, cash amounted to only VND 905 million, with the remainder being bank deposits.
Minh Long I's cash reserves are low, with most of its assets tied up in inventory. At the end of 2022, the company's inventory reached VND 1,207 billion, accounting for 42.1% of total assets. Inventory even exceeded revenue in 2022 (VND 1,123 billion).
In addition, the company allocates a significant amount of capital to dealing with its shareholder base.
Specifically, in 2022, Minh Long I spent 6.5 billion VND to pay land rent to Mr. Ly Ngoc Minh, the company's Chairman. Land rent paid to Minh Sang Co., Ltd., Minh Dat Co., Ltd., and Quan Lut Co., Ltd. amounted to 14.1 billion VND, 6.8 billion VND, and 40.2 million VND respectively.
In addition, Minh Long I paid 20.5 billion VND in interest expenses to shareholders Ly Ngoc Minh, Ly Ngoc Dung, Ly Huy Sang, Ly Huy Dat, Ly Huy Buu, and Ly Kha Tran.
Source
Comment (0)