On August 24, according to information from the Ha Giang Provincial Police, the Provincial Criminal Investigation Police Agency has initiated a criminal case, prosecuted and detained Ms. Nguyen Lan Huong (51 years old, residing in Cau Giay District, Hanoi), Chairman of the Board of Directors of Bao Chau Pharmaceutical Group JSC (headquartered in Vi Xuyen, Ha Giang) for three months.
Ms. Nguyen Lan Huong is accused of exploiting state regulations on business registration conditions and the self-declaration, self-payment tax mechanism to establish multiple shell companies.
According to the Ha Giang Provincial Police, the Chairman of Bao Chau Pharmaceutical Group JSC used these shell companies to create fictitious economic contracts and illegally issue value-added invoices to legalize raw materials, input and output goods, and enjoy value-added tax deductions for the Group.
Authorities examine the headquarters of Bao Chau Pharmaceutical Group. Photo: Ha Giang Police
The Ha Giang Provincial Criminal Investigation Police Agency determined that Ms. Huong carried out these actions with the purpose of inflating the company’s business performance to meet the conditions for participating in the stock market and issuing shares to raise capital from investors.
Specifically, in 2022 and 2023, Ms. Huong directly executed and instructed accountants to create fictitious economic contracts and illegally issue electronic value-added invoices, totaling over VND 367 billion, to serve the Group’s business operations.
What are the business results of Bao Chau Pharmaceutical Group JSC?
Bao Chau Pharmaceutical Group JSC was established in 2014.
Bao Chau Pharmaceutical Import-Export JSC, the predecessor of Bao Chau Pharmaceutical Group JSC, was established in 2014. In 2018, the company changed its name to Bao Chau Pharmaceutical Group JSC and increased its charter capital from VND 30 billion to VND 180 billion. This enterprise has a production facility spanning over 60,000 square meters for the preliminary processing of medicinal materials, production of natural cosmetics, functional foods, and manufacturing and trading of non-alcoholic and alcoholic beverages, and mineral water.
According to the latest business results for Q4 2023, Bao Chau Pharmaceutical Group JSC had zero revenue, but due to a cost of goods sold of VND 6 billion, a decrease of 94% compared to the same period last year, the company incurred a gross loss of VND 6 billion, while in the same period last year, it made a profit of VND 22 billion. After deducting other expenses, the company reported a post-tax loss of VND 15 billion, compared to a profit of VND 11 billion in Q4 2022.
For the full year 2023, the company’s revenue was only VND 65 billion, an 83% decrease compared to 2022, and it incurred a post-tax loss of VND 49 billion. Thus, compared to the plan set at the 2023 Annual General Meeting of Shareholders, the company achieved only 14% of its revenue target.
Previously, from 2018 to 2022, the company’s revenue ranged between VND 220 billion and VND 380 billion, with consistent net profits ranging from VND 24 billion to VND 70 billion. Notably, the company achieved its highest profit of over VND 70 billion in 2019.
According to the financial statements, as of the end of 2023, the company’s total assets were VND 647 billion. However, in the asset structure, the company had only VND 266 million in cash, a significant decrease from the beginning of the year. As of the same date, the company’s inventory was VND 160 billion, an increase of 18.5% compared to the previous year (VND 135 billion).
Additionally, total liabilities increased from VND 234 billion to VND 271 billion within a year. Of this, the majority was accounted for by payables, totaling VND 259.2 billion.
According to the financial statements, the company still had over VND 156 billion in undistributed post-tax profits, a decrease of VND 50 billion compared to the previous year.
Bao Chau Pharmaceutical Group JSC is a private company (not publicly traded). Previously, the company had plans to list on the Ho Chi Minh Stock Exchange but was unsuccessful.
Specifically, on March 13, 2023, the Ho Chi Minh Stock Exchange (HoSE) announced that it had received the registration dossier for listing 21.5 million shares of Bao Chau Pharmaceutical Group JSC, corresponding to a charter capital of VND 215 billion. However, on August 31, 2023, the company submitted a document to withdraw its listing registration application. The reason given for the withdrawal was that the current stock market conditions were not suitable for listing shares, and the Group also needed more time to review and complete the dossier as required.
On September 29, 2022, the company also submitted a listing registration dossier to HoSE. But on December 13, 2022, HoSE announced the suspension of the dossier review due to not receiving the complete and corrected dossier and additional documents as requested within almost three months of the company’s registration.
Prior to that, Bao Chau Pharmaceutical Group JSC was fined VND 350 million by the Hanoi Stock Exchange (HNX) for registering as a public company with the State Securities Commission since June 18, 2019, but failing to list its securities as required.
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