Grape King Bio Ltd (葡萄王), a supplier of probiotics and mycelium health foods, on Wednesday said that its operations would not be affected by legal troubles at its subsidiary.
The Taipei District Prosecutors’ Office has charged Grace Tseng (曾美菁), president of its direct-sales subsidiary, Pro-Partner Inc (葡眾), with breach of trust and contravention of business accounting rules after irregularities were found in transactions routed through a dummy offshore company, Grape King said.
Tseng was unknowingly caught up in the alleged breaches because of a “misunderstanding of the law,” Grape King said in a regulatory filing, adding that charges that she accepted kickbacks from a supplier were dropped.
In a separate filing, Grape King said that its chairman, Andrew Tseng (曾盛麟), and other employees were on Jan. 3 given a deferred sentence regarding alleged falsification of product expiration dates.
On Dec. 28, 2016, local media reported that Grape King at the end of 2012 repackaged and sold expired products.
The company at the time denied the allegations, saying a disgruntled family member made false accusations, because they were upset over succession of the company’s leadership.
However, investigators said that some employees told them they were instructed by supervisors to relabel expired goods as new products.
“Given that the relabeling was led and conducted primarily by the founding chairman and former senior management in 2012 and 2013, and that no wrongdoing was evident after Andrew Tseng took up the position of chairman and chief executive officer in 2014, prosecutors gave him a two-year deferred sentence, along with a fine of NT$10 million [US$324,128],” Grape King said.
Grape King, known for its Come Best tonic drink and Granoderma King nutritional supplement, reported consolidated revenue of NT$9.22 billion last year, up 7.93 percent from NT$8.55 billion in 2017, based on the new IFRS-15 accounting rules.
Without the new rules, revenue would have declined 1.75 percent year-on-year, the company said.
Pro-Partner, which accounted for 80.5 percent of Grape King’s total revenue, reported a revenue increase of 2.4 percent to NT$7.43 billion last year, while Shanghai Grape King Enterprises Corp (上海葡萄王), another subsidiary, saw sales grow 51.2 percent year-on-year to NT$1.39 billion, a 15.1 percent contribution to the parent company’s overall revenue, Grape King data showed.
Revenue from Taiwanese operations rose 4.4 percent to NT$406 million, the data showed.
Yuanta Securities Investment Consulting Co (元大投顧) is positive on Grape King, saying that Andrew Tseng’s verdict would end uncertainty at the company.
Grape King has adjusted to changes in Chinese e-commerce regulations by ensuring that most of its major contract manufacturing customers are registered businesses, while the court proceedings would not affect sales in China, Yuanta said in a report on Jan. 8.
Jih Sun Securities Investment Consulting Co (日盛投顧) is also optimistic about the company’s sales growth this year, driven by its own-brand probiotics, as well as contract manufacturing orders from China’s biggest direct-sale companies and Chinese health supplement brands.
Taiwanese companies such as Grape King have a five-to-10-year lead in manufacturing high-quality probiotics compared with cross-strait rivals, while growth momentum would also come from more than 10 new product launches by Pro-Partner, which is the second-largest direct-sales firm in Taiwan after Amway Taiwan, Jih Sun said in a report on Jan. 9.
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