CHAPTER 3

ANALYSIS OF THE ACTUAL FINANCIAL SITUATION

OF THE ONE-MEMBER LIMITED LIABILITY COMPANY OF NGHE AN TEA INVESTMENT
AND DEVELOPMENT

3.1.Introduction of Nghe An Tea Investment and Development Limited Liability Company [11, page 2]
3.1.1. The process of formation and development
Nghe An Tea Investment and Development One Member Limited Company was formerly known as
Nghe Tinh Tea Joint-Venture Company, which was established under Decision No. 52 / QD-UB dated
08/06/1986 of the People's Committee of Nghe Tinh province.
In 1992, after the separation of Nghe An and Ha Tinh provinces, the company was re-established under
Decision 2494 / QD-UB dated 29/12/1992 of the People's Committee of Nghe An province and called
Nghe An Tea Investment and Development Company.
And in 2010, the Company was renamed Nghe An Tea Development and Investment One Member
Limited Liability Company under Decision 3201 / QD-UBND.NN dated 26 July in 2010.
The Company has 7 subordinate enterprises including Bai Phu tea factory, Hanh Lam tea factory,
Thanh Mai tea factory, Ngoc Lam tea factory, Anh Son tea factory, CBDV Vinh tea factory and Hung
Son tea Factory.
International transaction name: Nghe An Tea Development Investment company limited.
Short name: NATEA Co Ltd.
Head Office: 376 Nguyen Trai Street, Vinh City, Nghe An Province.
Phone: 038 3518789 Fax: 038 3851242
Website: www.ngheantea.com.vn Email: natea@hn.vnn.vn
Nghe An Tea Investment and Development Limited Company was established in the transition to a
market economy, its over 25 years of establishment has gone through many stages with difficulties and
Certain success.
* Period from 1986 to 1994: This was the period of organizational structure formation, the
establishment of the management model, the mechanism of operation, the transformation of the
mechanism into tea production and the initial export. With the help of the Union of Vietnamese Tea
Factories in the export market, in 1987 the Union exported 300 tons to the markets, mainly of the
Soviet Union and Eastern Europe. However, in 1991, the communism system in the Soviet Union and
Eastern Europe collapsed and disintegrated, which significantly affected the company's production and
business. Also during this period, due to the implement of the policy of the Party and Government,
Nghe Tinh was split into two provinces of Nghe An and Ha Tinh. In the country, the economic model
also shifts from a centrally planned economy to a market economy managed by the Government.
Managing the union model is no longer appropriate. Therefore, on 29/12/1992 Nghe An People's
Committee issued Decision No. 2494 / QD-UB to transform Nghe An tea factory into Nghe An tea
development & investment company.
* Period 1995 - 2000: This is the period of stepping up the construction of concentrated raw material
areas, expanding the scale of processing capacity, directing export market and establishing the
mechanism for the entire company. The highlight of this period is the implementation of the guideline
"Rapid expansion, intensive farming". The company has invested in restoring and improving
technology, exploiting and effectively using black tea production lines. In 2000 the company exported
nearly 2,000 tons of tea with a turnover of 2.5 million USD.
* The 2001 period is the period of rapid accelerating development of scientific and technological
progress being applied into production, infrastructure and management mechanism being improved,
along with the continuous improvement of product quality, technological renewal, market expansion,
brand building. The company has developed many new tea varieties, built modern processing plants ...,
so the company's products have reached more than 20 countries in Europe, Asia ... with higher export
turnover than year than the previous year. The position of the company is increasingly confirmed in the
domestic and international market. In 2004, the company was the only tea company selected by the
Ministry of Trade as a reputable exporter. From 2003 up to now, the company has always been awarded
certificates of merit for export achievements and quality gold medals. In 2005, the State awarded the
third-class Labor Medal to Nghe An Tea Development Investment Company. From July 26, 2011, the
company has officially changed its name to Nghe An Tea Development & Investment One Member
Limited Liability Company and transferred directly from Nghe An Department of Agriculture and
Rural Development to the People's Committee of Nghe An province and continued operating until
today.
3.1.2. Organization and management of the Company
The organizational structure of the management of the company includes: leaderboard, professional
departments and service processing enterprises.
- General Director: is the manager of all modes of operation of the company, who decides the
organizational structure of management, assigns responsibilities, specific tasks, relationships between
affiliated enterprises.
- Deputy General Director: Assist the General Director in managing activities of investment and
development of production and business, synthesize information from other departments, and take
responsibility to the Director for assigned tasks.
- Administrative Organizing Department: To advise the General Director on the organization of
personnel and policies to ensure the living conditions for laborers, arrange recruitment and training of
laborers to suit the situation. Of the company.
- Import and export business department: is responsible for market research, expanding market share,
searching for partners, advising the general manager on tea export activities, searching the domestic
market, providing supplies for private enterprises to buy tea for their businesses and searching market
consumption.
- The Department of Industrial Property and Quality Control: Responsible for technical issues,
guidance and guidance to technical purchasing units in processing technology and quality control.
- Planning and Investment Department: Advise the Director on production planning such as investment
to expand production and take charge of technical units for planting, picking and taking care of tea.
- Financial Accounting Department: Collect timely notes about all economic activities arising in the
company. Analyze and evaluate the actual situation to provide information to decision makers in the
financial sector.
- Service processing enterprises are units attached to companies located in the districts and have the tasks of planting, tending and
processing tea products according to the production and business plan of the company.

General Director

Vice Director

Quality Administ-
Planning & rative Financial
Import & Checking &
Investing Manage- Accounting
Export Dpt. Technology
Dpt. ment Dpt. Dpt.
Dpt.

Hanh Lam Thanh Mai Ngoc Lam Hung Son

Bai Phu Tea Anh Son Tea Vinh Tea
Tea Tea Tea Tea
Enterprise Enterprise Enterprise
Enterprise Enterprise Enterprise Enterprise

Direct Relations
Functional Relations
Coordination Relations
3.1.3. Organization of the accounting apparatus
The Company applies both centralized and scattered accounting, has an accounting department at the
company office and each enterprise has its own accounting department which is independent
accounting and subject to inspection and direction of the company office.

Chief Accountant

Deputy of Accounting Dpt.

Accounting for Investment in CC and Fixed Assets

General Accounting Tax and bank

Accounting
Accounting
for finished goods Storekeeper
and debts Treasurer

: Direct Relations

: Professional Business Relations

Diagram 3.2: Structure of company accounting department

[Source: Corporate Personnel Department]
* Corporate accounting department:
- Chief Accountant: In charge of financial accounting in general for the whole company, advising the
director on financial issues, analyzing and evaluating financial reports of the company to submit to the
director as well as the other relevant departments.
- Deputy of accounting department: is an advisor to chief accountant in general administration and
accounting work in particular and in charge of investment in capital construction in the company.
- General Accountant: is responsible for monitoring the economic activities arising in the general
company and allocating expenses, profit and loss for all business activities of the whole company
according to the prescribed regime.
- Accounting for investment in capital construction and fixed assets: their responsibilities are to monitor
the situation of fluctuation, increase and decrease of fixed assets in capital construction investment for
enterprises and companies. When there is accounting fluctuations, it is their responsibility of making
vouchers and book entries to monitor and determine the cost, the residual value of expenses and
income if there is any occurrence during the process of using the fixed assets simultaneously and
monitor depreciation and amortization for specific asset classes.
- Tax and bank accounting: Has daily responsibility to set up and monitor relationships with banks,
monitor the situation of revenue and expenditure, expenses, taxes, compensation and social insurance
for the whole company & enterprise.
- Accounting for finished goods and debts: Monitor and reflect in the accounting books the economic
operations related to the finished products such as import, export, finished and inventory products at
the end of the statistical reporting period to project with general accounting.
- Storekeeper: is responsible for warehouse management, in charge of importing finished goods and
protecting finished goods in stock.
- Treasurer: Is responsible for managing cash, conducting daily receipts and expenses.
* Accounting department in enterprises: depending on the operation situation, the characteristics of
each enterprise accounting apparatus is different, which is generally led by the head of accounting
department of the enterprise.
Forms of accounting applied at the company: the form of book voucher under Decision No. 15 / QD-
BTC of the Ministry of Finance, the ex-warehousing price being calculated according to the method of
first-in-first-out, straight calculating, with the calendar year of accounting period from 1 January to
31/12. Currently, the company uses ACsoft accounting software to support accounting work.
3.1.4. Business characteristics of the company
Nghe An Tea Investment and Development Limited Liability Company has the function of participating
in planning and development of high quality tea production and processing areas; Commencement of
production and restore of tea products under contracts signed with tea growers; The organization of
production, business, application of technology, technology, policies and management mechanism
advanced to exploit the potential of land and labor in the province to develop in the direction of
Agriculture - Commerce; Gradually improve the material and spiritual life of staff and tea growers in
the area.
In the coming time, the company has the task of stabilizing and boosting the development of
production, business and development investment; To maintain and expand the international market,
focus on the domestic market, diversify tea products, combine with improve the quality of efficiency
and sustainability, further improve the organization of the management apparatus. Manage corporate
offices and enterprises, take more initiative in managing the management; To practice thrift against
wastefulness in order to reduce production costs, increase the competitiveness of consuming products,
promptly solve social problems, ensure social security and order and fulfill house obligations and water
delivery.
For the products of the company, the consumption activities in the past years are mainly export
(accounting for 90%) while domestic consumption accounts are only 10% but mainly retail, internal
consumption, and for marketing advertising. The company exports tea to many countries in the world
such as England, Poland, countries of the former Soviet Union, Singapore, Middle East countries (Iraq,
Pakistan, India ...). In the coming time, the company is expanding its export market to Japan and the
US.
For export sales, the company always determines to focus on direct export markets. The company's
warehouse is located in the company's office, where contracts are signed between the company and the
customer. The company will deliver the goods at the CIF price or FOB price depending on the content
of the contract signed with the customer.
For local consumption, the company's sales form is primarily shipped to carry out marketing,
advertising, and internal use activities within the company.
3.2. Data source analysis
In analyzing the financial situation at the company, the source of analysis is mainly based on the
financial reports, especially the balance sheet, the business operation result report, cash flow statement
and notes of financial statements.
The balance sheet is an aggregate financial statement that reflects the overall current assets of the
enterprise in two ways: Assets and funds formed at the time of reporting. The balance sheet is the
financial picture of the business at one point in time. The balance sheet is divided into two parts on the
principle of balance that the total assets are equal to total capital. SCIC is an important document for
the study of general assessment of the financial status, management and utilization of capital as well as
economic and financial prospects of enterprises.
Reports on business results reflect the business results of an enterprise in a given period of time.
Through the indicators on business planning audit, there can be a number of available actions such as to
check, analyze and evaluate the implementation of plans, production cost estimates, cost price, turnover
of products, materials consumed, cost situation, income of other activities and business results after one
period. In addition, it is possible to assess the development trend of enterprises over different periods
and to check the status of enterprises' obligations towards the State with respect to taxes and other
payables.