[비즈한국] IS Dongseo, which began as a construction company in the Busan region, was designated as a large business group three years ago, leading to the incorporation of Ilsin Development, a private company owned by Chairman Kwon Hyuk-woon, as an affiliate. Consequently, Ilsin Development's business report was disclosed for the first time in 17 years, revealing that it is generating only operating losses with no revenue. Why maintain a company that is not actively conducting business?
IS Dongseo, known for its apartment brand 'Eileen's Garden,' was founded in 1989 by Chairman Kwon Hyuk-woon under the name Ilsin Construction Industry. The name 'IS' was derived from the English abbreviation of 'Ilsin.' An emerging construction company, it initially expanded its business base by supplying villas in the Busan and Gyeongnam areas before successfully entering the metropolitan market. When IS Dongseo was designated as a large business group in 2021, Ilsin Development, Chairman Kwon's private company, was incorporated as an affiliate. However, a review of the business report disclosed for the first time in 17 years shows that revenue has been '0 won' for the past three years.
Before being incorporated as an IS Dongseo affiliate, Ilsin Development had only disclosed its business report once, in 2004. According to that report, the company had won construction contracts from firms like Samsung C&T028260, POSCO E&C, and Hyundai E&C000720, recording 9.2 billion won in revenue in 2003 and 2.7 billion won in 2004. At the time, its capital was 1.1 billion won, with Chairman Kwon holding a 49% stake and minority shareholders holding 51%. In 2007, the company conducted a capital reduction, which lowered its capital to 300 million won and made Chairman Kwon the 100% owner, effectively turning it into his private company.
With IS Dongseo's designation as a large business group in 2021, the obligation to disclose information about the same person's (Chairman Kwon) private company arose, and Ilsin Development’s business report was made public again after 17 years. According to the 2021 report, revenue from 2021 to 2023 was '0 won.' Furthermore, the company recorded operating losses—8 million won in 2021, 10 million won in 2022, and 40 million won in 2023—making it essentially a deficit-ridden company. However, it maintains a structure where it accumulates 100 million won in cash annually through other income, such as interest. Total equity stands at 4.4 billion won as of 2023, showing little fluctuation. In effect, it has abandoned its main business and is barely surviving by lending money to other affiliates and collecting interest.
It was also recently revealed that a small change has occurred at Ilsin Development. A former head of the finance division at IS Dongseo, which acts as the group's holding company, was appointed as an internal director at Ilsin Development. Last October, the company also lent 4 billion won to Ilsin E&C. As sudden changes were detected at the Chairman's private company, which has 'zero' revenue, analysts in the business community are raising questions about whether Chairman Kwon might be planning to scale up the business of Ilsin Development.
Regarding this, an IS Dongseo official explained, "The appointment was simply a personnel change following the retirement of existing executives," adding, "We understand that Ilsin Development has temporarily suspended business activities due to the recent downturn in the housing construction market. Maintaining Ilsin Development, despite its lack of revenue, reflects the owner's deep affection for the company where IS Dongseo began."