Cut staff, social insurance debt, tax debt
Minh Long I Company Limited is one of the typical names in the ceramic industry, especially in the fine arts sector. Minh Long I products are positioned in the high-end segment, becoming luxurious gifts in many major conferences.
Overcoming the Covid-19 pandemic, in 2022, Minh Long I recorded strong growth in both revenue and profit. Revenue from sales and service provision reached VND 1,123 billion, an increase of VND 382 billion, equivalent to 51.6%. 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 scenario, Minh Long I surprised everyone by cutting staff, tax debt and social insurance debt.
Specifically, as of December 31, 2022, Minh Long I's total number of employees was 2,517, a decrease of 55 compared to the end of 2021. Notably, despite reducing the size of its staff, the company increased remuneration for its leadership team. In 2022, Minh Long I recorded the salary and income of the Board of Directors at 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, owed social insurance and tax debts. Illustrative photo
Along with the increase in leadership salaries, there was also an increase in salaries for the media. 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 of money on advertising, Minh Long I has not yet fulfilled its tax obligations by the end of 2022.
Minh Long I's current income tax expense in 2022 is VND 3.1 billion. However, the company's paid corporate income tax is only VND 940 million.
As a result, as of December 31, 2022, Minh Long I recorded a target of Taxes and amounts payable to the State of VND 7.1 billion, a sharp increase compared to VND 1.4 billion at the beginning of 2022.
In addition, the company also has 19.2 billion VND Payable to employees. The company recorded 4.5 billion VND Payable for social insurance and 37.5 million VND for union fees.
Assets are formed mainly from… debt
Minh Long I is a large-scale company with capital of 700 billion VND. After decades of operation, the company has accumulated equity of 820 billion VND. However, capital at Minh Long I is modest compared to 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 can be seen that most of the company's assets are financed by debt.
Of which, 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 units lending capital to Minh Long I includes Asia Commercial Joint Stock Bank Binh Duong Branch - ACB (246 billion VND), Joint Stock Commercial Bank for Foreign Trade of Vietnam Binh Duong Branch - Vietcombank (335 billion VND), Joint Stock Commercial Bank for Industry and Trade of Vietnam Binh Duong Branch - VietinBank (268 billion VND).
At the end of 2022, Minh Long I fully paid off loans at the Military Commercial Joint Stock Bank, Binh Duong Branch (MBank) and the Vietnam Bank for Social Policies.
Assets of 2,866 billion, cash only 18.4 billion left: Where did the money go?
Minh Long I's cash flow is also a notable point. At the end of 2022, the company's total assets reached VND 2,866 billion, but cash. The Cash and cash equivalents indicator was only VND 18.4 billion, down from VND 26.2 billion at the beginning of the year. Of which, cash was only VND 905 million, the rest was bank deposits.
Minh Long I's cash is scarce as most of its assets are in inventory. At the end of 2022, the company's Inventory target reached VND 1,207 billion, accounting for 42.1% of total assets. Inventory was even higher than 2022 revenue (VND 1,123 billion).
In addition, the company spends a large amount of capital to deal with its shareholders.
Specifically, in 2022, Minh Long I spent 6.5 billion VND to pay land rent to Mr. Ly Ngoc Minh, Chairman of the company. Land rent paid to Minh Sang Company Limited, Minh Dat Company Limited and Quan Luc Company Limited was 14.1 billion VND, 6.8 billion VND and 40.2 million VND.
In addition, Minh Long I paid VND20.5 billion in interest expenses to shareholders Ly Ngoc Minh, Ly Ngoc Dung, Ly Huy Sang, Ly Huy Dat, Ly Huy Buu and Ly Kha Tran.
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