“Trend of growth and Performance Evaluation of Cement Industries in Bangladesh� Executive Summary This report shows the growth and performance of cement industry in Bangladesh and other parts of the world . For the purpose of the report the corporate websites have been used as source of information for the listed companies and shows the activities of three listed cement company in Bangladesh. Chapter One portrays the definition of growth, performance and way to measure the organizational performance. Then the chapter shows the research work of an industry. Chapter Two discusses the objectives, methodology and limitations of the report. Chapter Three overview of cement industry in the world and also Bangladesh. The growth and performance of three listed cement company in Dhaka stock exchange. And their comparative analysis, common size analysis and ratio analysis. Chapter Four draws conclusion to the report by placing some initiatives for improvement of cement industry in Bangladesh. The report shows that cement industry bringing substantial foreign remittance to Bangladesh and make our economy stronger compare to other countries. 1.1 Meaning and Definition of growth 1. That which has grown or is growing ; anything produced ; product ; consequence ; effect ; result. 2. The process of growing ; the gradual increase of an animal or a vegetable body ; the development from a seed, germ, or root, to full size or maturity; increase in size, number, frequency, strength, etc.; augmentation; advancement; production; prevalence or influence; as, the growth of trade; the growth of power; the growth of intemperance. Idle weeds are fast in growth. Growth: words in the definition Advancement, Consequence, Development, Effect, Fast, Frequency, From, Full, Gradual, Growing, Grown, Growth, Influence, Intemperance, Is, Maturity, Number, Power, Prevalence, Process, Produced, Product, Production, Result, Root, Seed, Size, Strength, Development, Emergence, Growing, Increase, Increment, Maturation, Ontogenesis, Ontogeny, Outgrowth, Definition of Economic Growth Economic Growth is an increase in the ABILITY to produce goods and services. This type of Economic Growth is caused by: a) more resources b) better resources c) better technology Three Definitions of Economic Growth 1. Increasing our POTENTIAL OUTPUT 2. Increasing Output, and 3. Increasing Real GDP per capita 1 Increasing our POTENTIAL OUTPUT : ability to prouduce more 2. Increasing output or increasing Real GDP (ACHIEVING our potential) a. achieving "full employment" and "productive efficiency"
b. causes: (1) producing at a minimum cost to achieve productive efficiency (a) not using more resources than necessary (b) using resources where they are best suited (c) Using the appropriate technology (3) Increasing Real GDP per capita This means increasing output per person. GDP per capita is calculated by dividing output by the population. 1.2 Definition of Business Performance It is important for managers within organisations to identify whether the organisation is achieving its strategic objectives, to understand how others may view the organisation's progress, and to be able to assess the performance of competitors or other organisations. Performance measurement needs to recognise both financial and non-financial measures of performance and be balanced in its approach. Used appropriately, performance measurement systems can be the foundation of an integrated and iterative strategic management system. • •
Way to measure business performance The link between performance measurement systems and strategy - the role of performance measurement in the development of an integrated and iterative strategic management system.
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The concept of the balanced scorecard - financial perspective, customer perspective, internal business perspective and the innovation and learning perspective. Develop the concept that the scorecard is a management system aimed at streamlining and focusing strategy in a way that can lead to breakthrough competitive performance. Use of different, but similar frameworks, to analyse performance in different commercial contexts.
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Ratio analysis, cash flow analysis, stock market analysis and strategic financial analysis - used to critically evaluate the performance of an organisation and it's competitors.
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The effects of accounting choice and creative accounting on financial statements (and the analysis thereof)
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Measures of financial performance - return on investment, residual income and shareholder value analysis.
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Customer perspective - examples; on time delivery, customer partnerships, time spent with customer.
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Internal business perspective - examples; new product introduction, productivity, capacity versus competition.
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Innovation and learning perspective - examples; new product lead times, employee suggestions, staff development.
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Dysfunctional aspects of performance measurement systems and the identification of ways in which such dysfunctionality can be addressed
1.3 Literature Review : Trend of Growth and performance of Garments Industry in Bangladesh It would be an unjust to give all the credits to any single part (e.g., global market, Bangladesh business community, or the government policy) for the boom of Bangladesh textile & RMG industry. In fact, a range of internal and global factors & issues combinedly has caused it to happen. Bengalis have century long history of mechanized tailoring and several thousand years of experience in hand stitching. The aptitude and art of sewing/stitching has genetically transmitted through the females of this land. Even today, one can hardly find a rural female adult who does not know hand stitching or embroidery work. From long since the textile industry and garmenting have been in this very land that has past export experience too. By exploiting the demand of the global apparel market, the local manufacturers/exporters backed by the responsive state polices have successfully utilized the skilled but cheap manpower resource to recover the land's lost pride, once again. The Milestones Ancient Bengal: Handloom had been in operation in the territory now comprising Bangladesh before the inception of the Christian era, believe many. The history and literature contain some piecemeal abstract information about handloom weaving of Sulatni era in between 1000 BC to 1600 BC. Mughal Era: The word muslin reminds the glorious days of Bengal textiles, particularly of Dhaka, during the Mughal era and the early colonial period. Muslin is an exceptionally high quality fabric of plain construction, woven in handloom with finest yarn measuring up to 250 Ne. The modern cotton spinning is able to spin cotton yarn only up to 120 Ne. Muslin and other textiles were exported in mass scale to different parts of India, Europe, and Central & West Asia. At that time Bengal also became the world famous silk producers because of huge sericulture concentration in Rajshahi & Murshidabad regions. Indigenous technology based (but high accuracy oriented) manual cotton spinning, quality katgahi silk-reeling and decorative handloom weaving were the causes of Bengali's in textiles advantage over any Asian & European nations of the time. Bengal muslin and other textiles boomed at that time because of the business friendly environment created by the Mughal regime. Under the umbrella of the social security and political blessing to business, Bengalis felt convenience to make investment in the sector and applied their inherited talent. British Era: In the middle of the British colonial era, the muslin technology was lost from the Bengal due to the tyrannies of the colonial rulers and marketing agents of UK based textile industries, and also the uneven competition with the low cost products of the mechanized textiles. Lack of political support, state's non-cooperation and lack of social initiatives (at least for lack of documentation through literature) have deprived Bangladesh and the world from muslin.
The Singer's sewing machines created new era of mechanized tailoring in the land by the end of 19th century. The colonial regime also introduced Bengal with the mechanized textile industry since 1930s. But the participation of local investors in establishing mechanized textile industry was constrained due to break out of the World War-II and the division of India in 1947. Pakistan Era: The supply of raw cotton from the then West Pakistan to Bangladesh opened new avenue for developing cotton spinning industry in the then East Pakistan, where handloom weaving was again on the verge of revival. Mostly the non-Bengali entrepreneurs availed the scope of establishing mechanized textile industry, which was blessed by the liberal business policies issued by the then Pakistan government and technical cooperation extended by East Pakistan Industrial Development Corporation (EPIDC). As a result, prior to 1971, Bangladesh had 858,000 spindles and 7,400 powerlooms and 375,00 operable handlooms, registering a good growth as compared to 1947 situation when the country had only 110,000 spindles and 2,700 power looms comprising 11 Textile Mills. Early 1960s was the beginning of ready-made garments manufacturing, which was then simply an initial venture of the local investors aiming to capture a share of the domestic market that remained under the custody of West Pakistani apparel manufacturers. Bangladesh Era: As compared to 1972-73, today's capacity of Bangladesh Textile & RMG industry is mammoth. The landscape changed largely in the last 22 years. The export oriented RMG started its journey only since 1977-78 with 6 manufacturing units. As a matter of fact, the Bangladesh Primary Textile (PT) & RMG industry started to be a little dynamic since 1983-84 when the country started earning some significant proceed (116.203 US $) through exporting RMG. At that time, the country's spinning sub-sector manufactured only 60.13 million kg of yarn and the power loom weaving produced 109.63 million meters of fabrics and handloom in excess of 600 million meters of finished textiles (national assortments like sari, lungi, towel/gamcha, wrapper/chador, etc.). Contrasting to that scenario, Bangladesh RMG industry exported in excess of US$ 8 billion in 2005-06; the primary textile as a partner of export oriented RMGs and domestic apparel industries produced 538 million kg yarn and 6,515 million meters of fabrics. However, the handloom production has declined from 630 million to 480 million meters in this period of time. Bangladesh RMG, Textile & Accessories Industries together now; Account for 77% of the total national export earning
Contribute 38 percent value addition of the industrial sector; Provide some 63 percent employment in the whole industrial sector of the country. Factors of Success & Failure of Bangladesh Textiles The First Decade Progress: 1972-73 to 1982-83
For the development of formal textile sector, Bangladesh initially proceeded with a mindset of state-owned entrepreneurship spirit and established Bangladesh Textile Mills Corporation (BTMC) in 1972 as a controlling organization. Except handloom and few small industries, the all medium to large PT industrial units were under the control of BTMC. Prior to 198182, BTMC activated some 74 industries by creating considerable number of new textile mills of economic size and by modernizing and balancing the rest ones. But the corporation's industry did not have any competitive edge and survived in the local market under the tariff protection. By the end of 1981-82, BTMC produced 60.13 million kg of yarn and 109.63 million meters of fabrics, which in 1972-73 were 39.14 million kg of yarn and 97.92 million meters of fabrics. The export oriented RMG industry that came into being in 1977-78 with 6 units in the private sector grew to 67, producing 34.62 million of pieces of garments. The production growth of the first decade Bangladesh Textiles could not be characterized as any thing closer to impressive, not to speak of booming.
The public sector endeavor for development of textile industry in the first decade of Bangladesh was an aftermath of the political philosophy of production imposed by the first government of the country. Inefficiency, corruption and strong trade unionism were the other real barriers to the potential growth of production. Female participation was not significant in this decade. The Second Decade Progress: 1983-84 to 1992-93
This decade provides a better feature of production and export performance as compared to the previous time span. The growth of spinning and apparel industries was remarkable in this decade; yarn production grew by 129% and RMG production by about 1600%. In 1992-93, Bangladesh exported 582 million pieces of apparel (woven RMG formed the lion share) and earned foreign nearly US $ 1.5 billion.
The success of this decade woes to the government policy that started divesting public sector since 1981-82 to original Bengali ownership. The government also allowed private sector investment for creation of large-scale spinning and weaving industries and especially encouraged setting up export oriented RMG. The textile policy declared in 1989 encouraged setting up of export-oriented textile mills and instructed the financial institutes for funding such projects at rational equity- up to 30%. Facilities such as duty draw back, back-to-back letter of credit facility for import of RMG inputs, and bonded warehouse provisions were the other important catalytic policy incentives. The global market, particularly the US apparel importers took interest about Bangladesh RMG because of its protected access to US Market. Moreover, the Hong Kong based buyers' and their agents or the middlemen who did the business in Shrilanka discovered Bangladesh a place better than the war prone zone.
The country's overall political whims by and large started favoring privatization. Labor unionism and labor unrest was controlled in the private sector with the blessing of the government. The business was well accepted socially; many skilled personnel switched over their professions from public to private sector for better career and earning. As cheap workforce females were found very suitable to form the main RMG workforce. The Third Decade Progress: 1993-94 to 2002-03.
The inefficiency of the state owned enterprises and the impulse of the open market economy led the government to undertake more liberalized policy since 1990-91 towards encouragement of private sector investment in textile & RMG industries. Subsequently, the government started privatization of the remaining mills under BTMC from 1993-94. In this decade, the tax/duty on raw cotton was made zero. As a result, there was remarkable increase in the establishment of the state-of-the-art technology based spinning, shuttleless weaving Knitting and more sophisticated RMG industries. In this decade, huge yarn and fabric production capacity was created to meet the demand of export oriented RMG industry that grew by 196%. The yarn production increased by 148% while fabric production increased by 38 times thanks to huge demand necessitated by the rapid growing knitting and modern suttleless weaving. The increasing export of RMG thanks to the speedy growth of the knit RMG necessitated huge supply of yarn and fabrics; the RMG companies wanted to rely more on the local textile industry to have ensured supply of yarn and fabrics in time against the short lead-time. A real boom of the industry took place in this decade. For the development of this decade, credit should be given to several dynamics that not only sustained the private PT industry and the export oriented RMG industry but also caused real boom of the sector. These are: International Trade Treaty & Agreement •
Bangladesh RMG export availed the generalized system of privilege (GSP) in the EU countries as a member of least developing country (LDC); this was not given to its nearest core competitors such as India, Pakistan, or Shrilanka.
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Quota facility in USA market was enjoyed, although that was reducing year after year.
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Rules of origin also favored Bangladesh in developing own backward linkage industry.
Bangladesh Government Policy •
Textile was declared as the thrust sector to extend all out cooperation to the export oriented RMG and the backward linkage industry.
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Provisions of cash incentives (initially to the extent of 25% of the export value) to the exporters and backward supply chains by the government o f Bangladesh.
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Extended bonded warehouse provisions.
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Rationalized tariff on textile & garments inputs.
International Supply Chain Hong Kong based dealmakers for their own business interest tried Bangladesh RMG export to expand in the EU, USA, Australia and Canada. Local Situational Aspects •
Bangladesh by middle of this decade had already built up a sizable backward linkage capacity- both PT & accessory industry, which similar non-fiber producing countries
like Shrilanka, Vietnam, and Mauritius & other potential African countries could not develop. •
Bangladesh was able to proof itself as a country having cheapest skilled work force having better attitude than any competitors countries.
Stakeholders Associations In the mean time, 3 strong stakeholders associations (BGMEA-Bangladesh Garments Manufacturers & Exporters Association, BKMEA-Bangladesh Knit Manufacturers & Exporters Association and BTMA-Bangladesh Textile Mills association) became very active for advocacy. They have kept strong role in eradicating systemic bottlenecks and acted as efficient pressure group to undertake policies in their favor by the government. Socio-Political Factors Bangladesh political parties did not oppose mass privatization; rather many political leaders openly or in anonymity started becoming textile Or RMG entrepreneurs. The workers' unionactivities were not counter-productive as in the early Bangladesh period and females' participation in the RMG & textile industry was not strongly discouraged by the religious sector. The Recent Progress: 2003-04 to 2005-06
It was grossly apprehended that the Bangladesh RMG business would start collapsing with the start of GATT i.e., the Post MFA era. The researchers of GTO (Gherzi Textil Organization-a Swiss consultancy firm) and PPMA (a Bangladesh consultancy firm) predicted that by 2008-09 the export would reach to US$ 10 billion if reforms, suggested by them, were undertaken and implemented- otherwise the export would gradually decline. But the actual scenario was a bit different. The production of yarn, fabric and apparels registered increase by 58%, 39% and 47% respectively in the last 3 years and the total export of textiles and RMG rose to in excess of US$ 8 billion. As a matter of fact, the government has implemented some of the recommendations made by GTO & PPMA. For example, the government has imposed more importance on activities of EPB, one-stop-shop service has improved, port complications have reduced, bank interest in some case has lowered down to 9% for export oriented industries; and the government, the donors (World Bank/SEDF & UNIDO) & the stakeholders associations have jointly started revamping the training centers/HRD institutions, extending quality support programs to improve quality, cooperating to strengthen accreditation and compliance issues, etc. On the other hand, the outbreak of SAARS virus in China & Hong Kong, war in Shrelanka & Afghanistan, and the tensions in between India & Pakistan etc. have pushed many buyers to come Bangladesh, a comparatively a better place enriched with long RMG experience and built up backward supply industry.
Finally, low cost of captive power generation and cheap labour (as shown below) in Bangladesh do really mater in a RMG business- that well understands the buyers or their agents who once did the business in this country. Together with all this, the continuation of the GSP support by the EU up to 2015 has caused buyers to rethink about Bangladesh once again. This is why in the recent time FDI (foreign direct investment) has happened in the textile & RMG sector. SWOT Analysis of Bangladesh Textiles & RMG Industry Strength Advantage over China, Pakistan & India •
Adequate supply of labour force of both sexes, attributed with less attitudes problem (less absenteeism and, aptitude for learning, and loyal) and high morale
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Cheaper labour cost
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Low cost of captive power generation using gas as fuel
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GSP facility up to 2015
Weakness Bangladesh produce mostly basic products- which are low cost items; the share of fashion products i.e., high value added product is very low. • Bangladesh does not produce the basic raw materials (only a negligible quantity of cotton but no manufactured fiber) and as such has to depend totally on sensitive global market. •
Because of inadequate backward linkage, lead-time happens to be long, nearly 3 months.
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Public power supply is erratic.
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Bank interest rate is still high enough, particularly of private sector bank, for investment of export oriented high value
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HRD facility, productivity and quality support, testing and accreditation support, design support and compliances are yet to be enhanced.
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Cost of doing business is high because of under table money
Opportunity •
Bangladesh has now a scope to go for more fashion oriented products deserving high price in the global market.
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With the help of further increase of productivity & quality and design support, Bangladesh can minimize cost and maximize profit and export value.
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Bangladesh, as a proven experienced RMG & Textile manufacturer, can expand share in the existing market (USA, EU, Australia, Canada, etc.) and can also explore opportunity in Japan & CIS countries.
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In the long run, Bangladesh has a scope to target huge populated country like China and India- where demand as well as cost of manufacturing will be wider.
Threat •
Unless new strong market is explored in home or abroad, any non-cooperation from USA & EU may jeopardize the whole Bangladesh RMG export business and consequently the textile manufacturing.
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Sudden price hike of cotton and yarn in the global market may push Bangladesh to a very awkward situation to devastate the business.
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The type of labour and political anarchies of the recent days if prevails in the future, Bangladesh may lose the business in the way Srilanka has lost.
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Growing terrorism, or its false/amplified propaganda, is also a big threat.
Scope of further Boom The Demand-Supply Gap The growth of domestic consumption depends upon a set of complex factors that include among others, the growth of population, per capita income, growth of foreign exchange remittance, change of tastes etc. Some of these are not well graspable factors for future demand estimation through dependable prediction models. Similar is the case with the export-oriented RMG growth, which is more complicated as access to international market depends not only upon the scale of demand or competitiveness but also on global trade policies, regional treaties, bilateral relations, non-tariff barriers, image of exporters, etc.
The major factors, which influence the growth of Bangladesh PTS are: •
Domestic Consumption of apparels, home textiles and technical textiles.
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Growth of RMG export from Bangladesh and direct export of various textile products (finished fabrics, saris, lungis, etc.)
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Importing countries' market characterizations, which is highly influenced by demand trend, visible and invisible regional factors and bilateral or multilateral trade pacts.
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Domestic factors of production (cost of production, local export enabling factors, etc.) and socio-political issues
Earlier a common misapprehension existed among the most people that Bangladesh exportoriented RMG would face a sort of catastrophe in the Post-MFA era due to implementation of WTO (complete abolishment of MFA i.e., withdrawal of quota from USA), marginalizeation of cash incentives and impacts of various regional blocks and Free-Trade Agreement (FTA). Firstly, EU has extended duty free access of apparel, which will exist until 2015. On the other hand, now it is understood that the abolishment of quota will initially retard the growth of woven RMG mainly due to loss of control over quota distribution by some local large RMG quota dealers; but this is creating better opportunity for the real RMG manufacturers (not the quota sellers) to compete with more cost advantage in the US market in the near future. For knit RMG export, so far nothing happened to be panic; the growth has rather enhanced in the recent period despite a little price fall. In fact, except China there are a few countries those have PT industry and enough RMG experience to throw Bangladesh out of competition from US and UK markets. Bangladesh RMG has to scare for the dangers that have correctly been anticipated so far, but there is no valid reason for being disappointed.
Anticipation of the demand, therefore, could be done based on Naive (Time Series) model of forecasting reinforced by forecasting methods based on behavioral dimensions, which depends on historical data and intuitive assumptions made by experts having long presence in the sector. So, we can have a look on the MOT&J's recent projection style for of forecasting the demand-production gaps of yarn and fabrics by 2009-10. The projection estimates the demand of fabrics and yarns based on two-tire demand models: in the short-term and in the long-term perspectives. The later model indicates that total demands will comprise 9,115 million meters of fabrics & 1,519 million kg of yarn in 2009-10, of which 2,475 million meters of fabrics for domestic consumption and 6,640 million meters for consumption of export-oriented RMG industry. Prospect for Creation of New Capacity in Different Sub-sectors of Textile Industry The potentiality of the industrial sector could be anticipated based on the demand-production gaps of yarn and fabrics by 2009-10.
Conclusions Bangladesh PT industry now lives in a demand driven expanding market thanks to the boom of export-oriented RMG industry that has developed a global network for export of apparels mostly to USA, EU, Canada, Australia and many other countries of the world. In addition, Bangladesh is also exporting home textiles (furnishing fabrics and other household goods made of textile fabrics), the demand of which is increasing in the overseas market. In order to make further boom, Bangladesh has to create new capacities and modernize & balance the existing ones. Encouragement of FDI from ethnic Bengalis in foreign countries would be one of the best options for the needed financing in addition to the local banks' efforts. Power supply has to be ensured. Bangladesh needs to develop capacities to provide the industries with a sustainable supply of resource personnel and support services in regard of research, design, testing & standardization, accreditation, compliances, etc. Bangladesh has to improve the port efficiency further and gear up domestic transportation. Labour crisis, labour safety, social rights and gender issues have to be dealt with more efficacies. It is important that the buyers should have a preferred access to the country; starting from reception on arrival to facilities such as hotel/rest house, tourism and recreation should be improved. Side by side exploring new markets in abroad, Bangladesh needs to undertake long-term comprehensive policies to create a strong domestic and regional market for RMGs and finished textiles, especially targeting China & India. On the other hand, to shorten the leadtime Bangladesh need to have a strong backward supply chain that in turns demand sustainable supply of textile fibers. Bangladesh either has to produce cotton and manufactured fibers or should make a long-term cont-ractual arrangement with some preferred fiber supplier country (ies). For all this, a comprehensive policy is now to be formulated without further loss of time. Cement industry in bangladesh Cement industry in Bangladesh is not very old industry. Producing cement and establishment of cement factory started from 1992.Athough it has done well in its sector. 2.1 Objectives: Cement industry is a blooming sector in Bangladesh.This report on cement industry has following objectives: •
to know the growth and performance of cement industry in Bangladesh
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To compare the position of Bangladesh in cement industry with other countries cement industry in the world
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how to become the cement industry a source of foreign money
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to make our economy be strong by developing cement industry.
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To encourage all to invest their money in this sector
2.2 Methodology The source of data of the report aer as followings : •
the internet.
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The websites of Cement industry ,Dhaka stock exchange,Bangladesh bank
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To collect annual report- 2009 of cement industry
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A publication of Bangladesh economic review 2009
Findings & Solutions 3.1 Overview of cement industry in the world 3.1.1
Cement industry in chaina
Cement Production China is, by far, the world’s largest cement producer with an estimated production of over 570 million tonnes in 2000.Per capita cement output has reached 448 kg, which is about 200 kg higher than the world average. At the founding of the People’s Republic of China in 1949, total national production was only 660,000 tonnes per year.By 1985, China had become the world’s leading producer. It has retained the leading position for sixteen years, and now produces about 36 percent of the world’s cement. The next three largest producers— the United States, India, and Japan—produce less than 20 percent of the world’s cement combined. Chinese planners project that cement output will increase by 3.4 percent annually during the Tenth Five-Year Plan (2001–2005) and by 2.9 percent during the Eleventh Five-Year Plan (2006–2001). they anticipate producing 660 million tonnes by 2005, 750 million tonnes by 2010, and 800 million tonnes by 2015. .Clinker production is to increase by 10 million tonnes per year from 2001 to 2005. Other forecasters suggest that China will hold production close to 2000 levels while upgrading technology and efficiency throughout the industry.7 So far, the conservative production estimates seem more likely. Cement Products and Quality China produces several strength grades of cement including #325, #425, #525, and #625. General types include silicate cement, general silicate cement, slag silicate cement, volcanic ash silicate cement, powdered coal silicate cement, and compound silicate cement. Special types include oil well cement, medium-low heat cement (dam cement), fast solid cement, antisulfate. Overall, Chinese cement is not of particularly high quality. This can be attributed to the widespread use of vertical kilns. According to 1997 data, only about 10 percent of production was high-grade #525 cement. Medium quality #425 cement makes up 62.7 percent of Chinese production and low-grade #325 cement makes up the remainder. There are surpluses and low prices for low-quality cement, and shortages and higher prices for higher-quality cements. 3.1.2 Cement industry in INDIA
Exports Indian cement accounts for not more than 0.2 per cent of total world cement exports. The sector is relatively insulated from international markets. Given the bulky nature of the commodity and the inadequacy of transport infrastructure in the country, international trade has been limited to neighbouring states in small quantities. Even that miniscule volume of exports took a beating after the south-east Asian crisis, though the situation has improved gradually and the export figures (including clinker) have touched 9 million tonnes in 2003-04 (Table 5). Exports have been mostly restricted to those large companies that own jetties. Companies like Gujarat Ambuja and L&T have been major exporters, who export mainly to get incentives like duty-free import of high grade coal and
Table 5: Exports of Cement (in million tonnes) Year Cement Clinker Total 2001-02 3.4 1.8 5.1 2002-03 3.5 3.5 6.9 2003-04 3.4 5.6 9.0 2004-05 3.3 4.8 8.1 2005-06 6.0 Source: Economic Survey 2005-06, GoI and CMA
3.3.3 Cement industry in Pakistan The industry comprises of 29 firms (19 units in the north and 10 units in the south), with the installed production capacity of 44.09 million tons. The north with installed production capacity of 35.18 million tons (80 percent) while the south with installed production capacity of 8.89 million tons (20 percent), compete for the domestic market of over 19 million tons. There are four foreign companies, three armed forces companies and 16 private companies listed in the stock exchanges. The industry is divided into two broad regions, the northern region and the southern region. The northern region has around 80 percent share in total cement dispatches while the units based in the southern region contributes 20 percent to the annual cement sales. Fiscal Performance 2008-09 Business Recorder reported that Pakistan’s cement exports witnessed a healthy growth of 65%, to over 6 million tons during 7 months of the current fiscal year mainly due to rise in international demand. The exports may reach to 11 million tonnes and earn approx $ 700 million during 2008-09. The statistics of All Pakistan Cement Manufacturers Association also showed that cement exports had mounted to over 6 million tons in 7 months as compared to 3.62 million tons of same period of last fiscal year, depicting an increase of 2.38 million tons. Cement exports
during January 2009 went up by 30% to 0.81 million tons as compared to 0.623 million tons in January 2008. However, slow construction activities in the country during the period badly upset domestic sale of cement, which depicted decline of 15%, to 10.77 million tons as compared to 12.59 million tons of last fiscal year. By September 2009, after witnessing substantial growth in all three quarters of fiscal year (FY) 2008-09, cement sector concluded the fourth quarter with a handsome growth of 1,492 percent on yearly basis, All Pakistan Cement Manufacturers Association’s report revealed on 29th September 2009. Higher retention prices (up 59 percent) and high rupee based export sales amid rupee depreciation (20 percent) drove profits up north. However, this growth is magnified, as FY2007-08 was an abnormally low profit period for the sector. Moreover, the performance is skewed towards large players with export potential as profitable companies in both years posted increase of just 109 percent, said analyst at JS Research Atif Zafar. He said that cumulative profitability of companies in FY09 stood at Rs 6.2 billion or $78.2 million as compared to Rs 386 million or $6.2 million depicting a massive growth of 1,492 percent. Companies with profits in both the years posted 109 percent earnings improvement. Though total dispatches were down 2 percent, net sales grew by 55 percent to Rs 101.4 billion or $1.3 billion on the back of higher net retention prices (up 59 percent) and improved export based revenues. Cost of sales/tonne also rose by 33 percent on yearly basis amid higher realised coal prices and inflationary pressures, the analyst maintained. Production Capacity In Pakistan, there are 29 cement manufacturers that are playing a vital role in the building up the country’s economy and contribution towards growth and prosperity. After 2002-3, most of the cement manufacturers expanded their operations, and increased production. This sector has invested about $1.5 billion in capacity expansion over the last six years. The operating capacity of cement in 1991 was 7 million tons, which increased to become 18 million tons by 2005-06 and by end of 2007 rose to above 37 million tones, and currently the production cpapacity is 44.07 million tonnes. Cement production capacity in the north is 35.18 million tons (80 percent) while in the south it is only 8.89 million tons (20 percent). The cement manufacturers in 2007-08 added above eight million tons to the capacity and the total production was expected to exceed 45 million tons by the end of 2010. It may result in a supply glut of seven million tons in 2009 and 2010. Actual Cement Production (in million tons) According to Government Board of Investment, 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
9.83 10.85 12.86 16.09 18.48 22.73
2007-08 2008-09
26.75 20.28
History of Cement Industry in Bangladesh Cement is the latest addition in the list of export commodities in Bangladesh. Our countrystarted exporting cement from January 2003. Earlier, apart from some production of state-owned Chhatak Cement Factory, the country was dependant on its import. In this context, local investors took the initiative for setting up cement factories and starts producing cement in 1992. The production in eight private factories stood 34 lakh tons in 1997, So far, about 100 Factories got government's approval of which 56 factories are on production with a production capacity of 1.30 crore metric tons against a domestic demand of 60 lakh tons in a year. Beyond the border Research shows that there is a 12 percent increase in domestic demand of cement every year. But the investors cannot rely on only the domestic demand of the cement. They have to look for markets abroad. It is understood that there is no way to get the market abroad without producing international standard quality cement. Aramit Cement The company has completed a very successful year of commercial operation. During the period, the Company sold out its product “ Camel Brand Cement� both in local market and export to India. Management of the Company made tremendous effort to popularize the Brand both in local and export market overcoming all setbacks and unstable conditions prevailing thereat. On the other hand, price of raw materials in the world market was lower as compared to last year which had helped to reduce the production cost of the cement. In this circumstances, the company to keep the price of the product within affordable limit that helped to increase sales revenue resulting achieving stronger position to complete with other giants in this sector and also helped to earn net profit (after tax) amounting to Tk.60,685,253 which is much higher compared to last year’s profit. Production During the year the Company was able to produce a total of 162,445 metric tons of cement, which was 77.35% of installed capacity as against 136,713 metric tons in 2008 which showed 19% increase compared to last year. In fact, production largely depends on demand and it could have been increased in demand of cement in the market was more. However, achievement of production is appreciable in respect of capacity of machinery and present requirement of local market. Productions of the last five years have been summarized in the following table: Comparative Statement of Production Particulars
2009
2008
2007
2006
2005
Installed Capacity (in 210, 000 metric tons)
210, 000
210, 000
210, 000
210, 000
Actual Production (in 162,445 metric tons)
136,731
127,581
138,248
119,383
Capacity (in %)
Utilization 77
65
61
66
57
It appears from the above that production of cement has been increasing gradually from the year 2005 to 2009 and slightly decreased in the year 2007, which reflects gradual improvement of production performance of the Company. Sales During the year under review total sales comes to 162,445 metric tons of cement as against 136,731 metric tons in 2008. Accordingly, net turnover in 2009 stands at Tk. 843.84 million against Tk. 762.61 million in 2008. Sales activities were accomplished through dealers and large number of non-dealers throughout the country during the year under review. Moreover, the Company exported 16,610 metric tons of cement to India during the year against 17,945 metric tons in last year. The company have arranged Indian dealer conference both in Agartala India and Coxs Bazar to explore the export market. Financial Performance Financial performance of the Company during the year 2009 along with previous years are briefly summarized below: Particulars
2009 Taka
2008 Taka
2007 Taka
2006 Taka
2005 Taka
Net sales
843,836,356
762,612,203
597,500,927
561,102,750
457,558,571
profit/ 194, 767,412
58, 540,578
72,948,414
47,811,209
610,823
Trading profit/ 163,092,343 (loss)
31,688,961
54,702,446
33,295,240
(11,868,094)
Profit/ (loss) 103,377,053 before income tax
12,012,618
30,516,878
14,921,807
(26,840,998)
Provision for 42,691,800 income tax
9,600,000
16,500,000
7,950,000
-
Profit/ (loss) 60,685,253 after income tax
2,412,618
14,016,878
6,971,807
(26,640,998)
Proposed dividend
-
6,000,000
-
-
Gross (loss)
16,800,000
Contribution to the National Exchequer The Company contributed an amount of Tk 192,035,302 to the National Exchequer in the form of Customs Duty. Value Added Tax (VAT) and Advance Income Tax deducted at source during the year under review. Contribution to the national exchequer made under various heads during the last five years have been mentioned below:
Contribution to the National Exchequer
Particulars
2008 Taka
2007 Taka
2006 Taka
2005 Taka
128,250,859
95,143,766
87,809,441
67,832,435
Duties at 48,851,621 impost stage
46,414,898
41,696,758
54,869835
44,361,711
Advance 14,398,091 Income Tax Adjustable/ Refundable
15, 838,757
4,200,000
2,641,629
1,201,679
Total
190,504, 514
141,040,524
145,320,905
113,395,825
Value Tax
2009 Taka
Added 128,785,590
192,035,302
Dividend The company could not pay any dividend to the honorable shareholders due to insufficient profit earning in the last year. During the year under report the Board of Directors has recommended 12% cash dividend out of the profit for the year ended on 31 st December, 2009. The amount of dividend to be paid to the shareholders will stand at Tk. 1.68 crore. Current Year’s Activities It may be pointed out that the prices of clinker and other raw materials has gone up by 10-15 US Dollar per Mt. Therefore, with the same volume of production and sales, profitability as that of last year can not be sustained Considering the present pace of infrastructural development in the country, the demand for cement has increased considerably as compared to last year and accordingly the Company has planned to produce and sell 2 lacs Mt of cement this year utilizing about 95% of its installed capacity in order to increase profitability and improve the overall performance of the Company. Welfare activities extended to employees 1. Picnic: The management, officers, staff and workers of the Company are enjoying picnic once in every two years. Annual cultural program is held in the picnic spot. 2. Haj program: One person from the permanent employees of he group (whose age is 40 and above) is sent to perform Holly Haj once in every year by selection through lottery of the cost of Company. Corporate Social Responsibility 1. Blood donation: The managers, officers, staff and workers of the Company donate blood once in a year to the “Sandani” infactory premises. 2. Relief distribution: As the part of Corporate Social Responsibility, the Company distributed blankets and warm cloths in winter season to the distressed and winter affected people. In rainy season relief is also distributed to the flood affected people of various areas of the country.
Comparative Analysis Key operating and financial data of last five years have been presented below in summarized form: Particulars
2009
2008
2007
2006
2005
Taka
Taka
Taka
Taka
Taka
Net sales
843,836,346 762,612,203 597,500,92 7
561,102,750
457,558,571
Cost of goods sold
649,068,944 704,071,625 524,552,513 513,291,541
456,947,748
Gross profit/floss)
1 94,767,41 2
58,540,578
72,948,414
47,811,2 09
Operating expenses
31,675,069
26,861,617
18,245,968
14,515,9 12,478,917 69
Trading profit/floss)
163,092,3-3
31,688,961
54,702,446
33,295,2 (11,868,094) 40
Financial expenses
4 1, 9/7, 143
24,454,370
25,924,996
19,496,9 14,881,458 76
7,702,760
5,385,612
3,345,580
1,908,90 1
607,585
1,606,152
Other income/charges) operating (net)
785,3
610,823
108,554
Contribution @ 5% to WPP & WF
5,440,897
__
Profit/(loss) before income tax
103,377,053
12,012,618
30,516,878
Provision for income tax
42,691,800
9,600,000
16,500,000
7,950,0 00
Profit/(loss) after income tax
60,685,253
2,412,618
14,016,878
6,971 , (26,640,998) 807
Transferred from Tax holiday reserve
41,000,000
—
—
58 14,921,80 (26,640,998) 7
—
—
—.
Dividend (Loss) balance to date
16,800,000 — 6,000,000 (99,155,037) (174,040,290 (176,452,90 ) )
— — (184,469,786 (191,441,593 ) )
Total current assets & properties
368,889,041 306,178,916 200,542,971 150,168,808 118,037,786
Total current liabilities
540,917,308 518,342,101 422,423,826 343,833,723 274,693,852
Total non current liabilities
111, 109,486 112,535,226 75,715,934
108,888,989
147,162,103
Current ratio
0.68
0.59
0.47
0.44
0.43
66,844,963
22,959,710
20,547,092
12,530,214
5,558,407
Earning / (loss) per share (basic)
43.35
1.72
10.01
4,98
(19.03)
Dividend per share
12.00
—
7.50
—
—
Shareholders' equity
Quoted price per share ( year 565.25&571. 1 77.50 end ) DSE & CSE 25 &180.00
150.74&154 73.25 & 76.00 .00
40.00 & 40.00
Comparative Analysis Comparative (Taka in 000) Particulars
2009
Authorized capital
500,000
500,00
500,000
500,00
500,000
Paid-up capital
209,000
190,000
190,000
190,000
190,000
Shareholder’s equity
1,870,09 9
628,290
685,249
661,065
619,933
Tangible fixed assets
1,678,95 7
590,057
564,885
580,334
570,818
Net current assets
191,142
38,288
121,405
91,232
53,536
Sales -local
1,139,99 2
1,091,381
1,008,224
886,093
581,458
74,343
138,506
94,191
64,409
104,255
Gross profit
228,698
23,712
129,672
106,058
65,069
Operating profit/ (loss)
175,905
(39,557)
75,665
59,433
17,106
Net profit/ (loss) before tax
197,900
(28,459)
78,784
62,332
20,814
Net profit/ (loss) after tax
143,400
(28,459)
52,684
41,132
20,814
7,935
(22,765)
5,693
1,509
1,377
2,090,00 0
1,900,000
1,900,000
1,900,000
1,900,000
Tk 895
Tk 331
Tk 361
Tk 333
Tk 326
Tk 68.61
Tl (14.98)
Tk 27.73
Tk 21.65
Tk 10.95
Sales- Export
Cumulative surplus
No. of shares Shareholders equity per share Earning per share
2008
2007
2006
2005
Cash dividend
10%
-
15%
15%
15%
Stock dividend
10%
10%
-
-
-
Management information 2009 a.
Liquidity and Solvency Ratio: 1. 2. 3. 4.
b.
Current ratio Quick ratio Debit/Equity ration Interest coverage ratio
1.42:01
1.07:1
0.79:1
0.56 : 1
-
0.01 :1
22.97
-
18.83%
1.93%
11.81%
(2.31%)
10.58%
(4.52%)
15.84%
(4.33%)
20.56
-
78
73
247
221
84
70
409
364
Profitability Ratio: 1. 2. 3. 4. 5.
c.
2008
Gross profit to sales Net profit to sales Net profit to capital employed Return on equity Price earning ratio
Manpower position: Managers & Officers Staffs Workers
Performance The Company made considerable progress during the year. During the year under review the company achieved net profit of (after tax deduction) Tk. 143.40 crore against loss of Tk. 2.84 crore in 2008. The sales value in the year 2009 is lower than 1.26% than the previous year 2008 and the sales quantity in the 2009 is 7.05% higher than the year 2008. The overall achievement was made possible through efficient management, cost reduction, proper planning of raw materials procurement & handiling shipment schedule. Production In spite of the hard realities the company managed to achieve satisfactory performance in respect of production and sales due to the efforts of all employees. The company produced 223,139 M.T cement during 2009 as against 208, 434 M.T in 2008.
Sales The overall sales performance in 2009 showed a steady upward trend. During the year Taka in sales volume is lower than 1.26% than the year previous 2008 and the sales quantity in the 2009 is 7.05% higher than the year 2008. Investment During the year under review, the management has decied to invest in two new projects namely “Confitex Limited and Confidence Electric Limited”. Confitex Limited will set up a modern textile mills with specially home textile, dyeing and all textile related products. The estimated cost will be about Tk. 1,850 million. Confidence Cement Limited and it’s associated company Confidence Steel Limited shall hold 50% shares equally of the said project. Confidence Electric Limited will manufacture transformers, engergy savgings lamps, automotive & industrial batteries and various electrical products. The estimated project cost will be about 1,000 million. Confidence Cement Limited and Confidence Steel Limited will hold 49% and 51% respectively shares of Confidence Electric Limited. Land for the above mentioned projects have already been purchased. Beside these, the company is also managing it’s own portfolios through investing in listed shares for boosting company’s profitability. During the year under review the company earned profit of Tk. 2.81 crore by operating in capital market. Financial Results The operating financial results of the company for the year ended 31 December, 2009 s compared to previous year are summarised hereunder :
2009
2008
Taka
Taka
Net turnover
1,214,335,757
1,229,887,420
Gross profit
228,698,969
23,711,914
Net profit/ (loss) before tax
197, 899,884
(28,458,932)
54,500,000
-
143,399,884
(28,458,932)
Gross profit to turnover
18.83%
1.93%
Net profit to turnover
11.81%
-
Tk 68.61
(Tk. 14.98)
Particulars
Provision for taxation Net profit / (loss) after tax
Earning per share (SPS) Contribution to the National Exchequer
The company contributed total amount of Tk. 265, 097, 144 to the National Exchequer in the form of Customs duty, VAT and Advance Income Tax under during the year. The break-up of these payments are shown in the table:
2009
2008
Govt. Revenue
Taka
Taka
170,998,918
163,707,177
Customs duty
71,690,571
68,490,492
Advance income tax
22,407,655
26,054,337
__________
__________
265, 097,144
258,252,006
VAT
Total Taka
Dividend Considering the overall financial position of the company, the Board of Directors recommended to pay cash dividend on the paid up capital of the Company @ 10% i,e Tk, 10 for each share of Tk 100 and stock dividend @ 20% i,e 1 bonus shares for each 5 ordinary shares for the year 2009. Environmental Role The world there is now increased focus on environment, Accordingly the company has adopted strategies for ensuring environment friendly atmosphere. Bangladesh does not have any commercial deposit of limestone, the agreement provides for uninterrupted supply of limestone to the cement plant at Chhatak in Bangladesh by a 17 km long belt conveyor from the quarry located in the state of Meghalaya. The company in Bangladesh, Lafarge Surma Cement Ltd. wholly owns a subsidiary company Lafarge Umiam Mining Private Ltd. (LUMPL) being registered in India, which operates its quarry at Nongtrai in Meghalaya. Lafarge Group, with 176 years of experience, holds world’s top-ranking position in Cement, Aggregates, Concrete and Gypsum. It operates in 78 countries with around 78,000 employees. Lafarge in named as one of the 100 Most Sustainable Companies in the World. The Company is already meeting about 8% of the total market need for cement and 10% of total clinker requirements of Bangladesh market whereas the Company continues to enjoy strong growth rates. BY supplying clinker to other cement producers in the market, the Company contributes some USD 50-60 million per annum worth of foreign currency savings for the country. The company contributes around BDT 1 (one) billion per annum as government revenue to the national exchequer of Bangladesh. About 5,000 people depend on our business directly or indirectly or indirectly for their livelihood. The company believes that cement is an essential material that addresses vital needs of the construction sector. The Company is very much optimistic to meet the growing needs for housing and infrastructure in the construction sector of Bangladesh. In economic terms, 2009 will be remembered as a year of global economic crisis. Like any other, the construction industry suffered a significant slump, particularly in Europe and North America. However, in contrast 2009 was a good year for the company’s performance. During the last year, your Company has shown remarkable improvement in enhancing its national markets share. While the element industry has experienced double digit growth, the
Company has grown at double the cement market growth rate. Majority of our trade customers are operating on cash and not credit basis, which has significantly strengthened the Company’s cash flow for 2009. The Company has continued to improve the distribution system by – Opening two new depots in Barisal and Chittagong, as well as increasing the storage capacity of existing depots to meet the sales demand. In addition to the dedicated truck fleet, the Company has also deploy a fleet of dedicated barges to increase the shipment of cement through the Surma River to reduce logistics costs. All these actions have resulted in a 32% increase in dispatch volume in 2009. Despite ongoing challenges, the Company a respectable profit in 2009. However the fact that Company had significant amount of past accumulated loss up to the end of 2008. The Board of Directors of the Company therefore recommended not declaring any dividend for the year 2009. This has been done in order to the financial position of the Company and safeguard the long term interests of the shareholders and the sustai8nable future of the Company. Production Performance 2009 is a year of many milestones in the Company’s plant performance. During 2009, main thrust was given to implement improvement plans for wet raw materials handlings, improving reliability of VRM and improving the quarry crusher performance. Parameters
Units
2009
2008
Clinker Production
Kt
1184
1022
Cement Products
Kt
957
747
Clinker Dispatches
Kt
536
392
Cement Dispatches
Kt
982
744
In 2009 the Company successfully explored the opportunity to use local companies for manufacturing and fabrication of some critical spares, which has helped in reducing costs and foreign exchange outflows. Commercial Performance During the last year, your Company has shown remarkable improvement in while cement industry has shown double digit growth, Company has grown at double the cement market growth rate. Majority of our trade customers are operating on cash and not credit basis, which has significantly strengthened your Company's cash flow for 2009. The Company's brand SUPERCRETE is now a well established brand in the market and is the most widely available brand in any part of Bangladesh. This was only possible through launching an efficient distribution network with focus on retail distribution. You-will be happyhas doubled the retail distribution network in 2009, compared to the previous year. Yr Company made significant improvements by deploying a fleet of dedicated trucks and barges and has opened new terminals in Barisal and Chittagong, along with the existing terminals injlhaka, Noapara and Sylhet. The terminals are operating on 24 hours basis to give better services to our valued customers.
The Company is making further improvement in the distribution system to load barges/trucks during monsoon and to increase the dispatch capacity. This will further improve the demand/supply gap particularly during peak seasons and monsoons. The quality of the Company's product has been perceived by the customers as "Customers' Preferred Choice" due to its consistent quality. Lab testing equipments are calibrated regularly and we have installed a web based application to record testing data on line at the ATC (Asian Technical Centre) without any human interference. This has further enhanced the integrity and reliability of our product testing data. The company is in constant touch with the engineers, contractors, masons and architects to enhance our brand equity through face to face interaction. The company has organized a number of technical seminars and mason meets to demonstrate its product usage properties as well as to share good construction practice. Logistic Performance The any has continued to improve the distribution system by opening two new depots in Barisal and Chittagong, as well as. In addition to the dedicated truck fleet. The company has also deployed a fleet of dedicated barges to increase the shipment of cement through the Surma River to reduce logistics costs. On clinker loading, the Company has introduced a clinker loading skirt to increase loading efficiency and reduce clinker dust emissions during loading process. The Company will continue to implement other efficiency and safety measures to further improve our logistics performance. Financial Performance
Tk. 000 2009
2008
Profit before tax
1,049,829,
940,982
Income tax
(466,904)
(305,787)
Net profit after tax
582,925
635,195
Transfer to un-appropriated profit
582,925
635,195
10.44
10.94
Earnings per share
Dividend Despite the fact that the Company has earned a consolidated EPS of Tk.17,15 in 2009, the Company still has large accumulated loss. In order to strengthen the financial position of the Company and safeguard the long term interests of the shareholders and the sustainable future of the Company, the Board of Directors of the Company-did not recommend any dividend for the year 2009. ) Human Resources
The Company is emphasizing on the development of the employees to be ready to take over their next position and ensure a long term career for them. A complimentary recruitment process is being followed to recruit the right talent for the right position from the market. A rigorous succession planning process has been rolled out to identify the successors for the key positions and a proper development plan is formed for them. Retention strategies are also being designed for the employees of the Company. Local talents are already taking over positions replacing the expatriates in the plant and it is an on-going process. Corporate Social Responsibility The Company strongly believes that business is a priority but social welfare is a responsibility. This is a key for sustainable development. Thus, it has wide ranging community development activities around its plant at Chhatak and its quarry in Meghalaya. The focus of this year's CSR activities was Healthcare. 3few Company took important steps in this regard. The Company has provided sanitation wares to two hundred (200) families in remote villages near the plant at Chhatak. Your Company also provided arsenic filters to all the project affected families to ensure access to safe drinking water. There is also a qualified physician and a nurse available everyday to provide free medical assistance in a medical clinic at the Community Development Centre at Chhatak which has brought tremendous relief to the Project Affected People (PAPs). They now have access to primary healthcare that includes consultation and medicinal support. Satellite clinic sessions are also held periodically in remote villages taking healthcare services to the doorsteps of the villagers. Comparative Analysis: Tk, 000 2009 7,543,725 (5,105,542 2,438,183 (376,219) (124,949) 2,947 1,939,962 (897,339) 62,460
2008 6,211,938 (3,836,583 2,375,355 (359,058) (132,022)
2007 2006 2,399,876 153,190 (2,284,166 (111,872) 115,710 41,318 (265,017) (164,350) (107,248) (35,185) 315 1,968,034 (102,151) (157,902) (1,055,934 (1,140,954 (553,253) ) ) 106,493 92,496
REVENUE Cost of sates GROSS PROFIT General and administrative expenses Selling and distribution expenses Other OPERATING PROF!T/ Finance expenses Finance income Contribution to Workers' Profit Participation (55,254) 78,408 and Welfare Funds NET PROF1T/(LOSS) 1,049,829 940,982 (1,136,612 (618,659) income tax (466,904) (305,787) 281,229 105,065 NET PROFIT/(LOSS) AFTER 582,925 635,195 (855,383) (513,594) Earnings per share (Taka) 10.04 10.94 (14.73) (8.84) Tk. 2009 ASSETS NON-CURRENT ASSETS Property, plant and equipment
000 2008
2007
2006
13,036,12 13,341,04 13,554,36 13,550,833 6 3 6
Intangible assets Investment in subsidiaries Loan to subsidiary company Deferred income tax assets Current assets LIABILITIES
8,383 11,020 14,153 17,862 519,893 519 893 519,893 519,893 1,129,641 -j n^n 1,233,900 1,243,541 81,767 393,811 106,315 2,318,588 2,507,839 1,478,984 1,500,869 17,012,63 17,702,12 17,195,10 16,939,313
Shsre capita! 5,806,868 n one; 5,806,868 5,806,868 Accumulated loss (1,053,857 (1,636,782 (2,271,977 (1,416,594 Shareholders' equity 4,753,011 4,170,086 3,534,891 4,390,274 NON-CURRENT Long-term debt 4,705,955 6,404,929 8,112,809 8,292,136 Deferred income tax liabilities 385,137 _ Contribution to employee 43,901 31,866 . . Current liabilities 7,124,627 7 OQ^ ? 5,547,407 4,256,903 TOTAL EQUITY AND 17,012,63 17,702,12 17,195,10 16,939,313 Common size analysis and ratio analysis of the three cement company: Common Size Analysis : 1) Cost of goods sold to sale Lafarge Surma Cement= .617 Confidence Cement =.8116 Aramit Cement = .769 2) Operating expense to sale Lafarge Surma Cement = .053 Confidence Cement = 0.0363 Aramit Cement = .769 3) Gross profit to sale Lafarge Surma Cement=.3825 Confidence Cement =.1883 Aramit Cement = = .2308 4) Operating profit to sale = Lafarge Surma Cement=.3165 Confidence Cement = .1448 Aramit Cement = = 0.128 5) Net profit before tax to sale Lafarge Surma Cement=.1938
Confidence Cement = = 0.162 Aramit Cement = = 0.125 6) Net profit after tax to sale Lafarge Surma Cement=.1319 Confidence Cement = 0.1180 Aramit Cement = 0.0719 7) Non current assets to total assets : Lafarge Surma=.8615 Cement Confidence Cement = = 0.721 Aramit Cement = 0.4868 8) Current assets to total assets : Lafarge Surma Cement=.1384 Confidence Cement = 0.2780 Aramit Cement = = 0.513149
1) Liquidity ratio: 1) Net working Capital Lafarge Surma Cement= (4806039) Confidence Cement = 191142009 Aramit Cement = (172028267)
2) Current ratio Lafarge Surma Cement = .325 Confidence Cement = .419 Aramit Cement = .6819 3)Acid test ratio Lafarge Surma Cement =.0957 Confidence Cement = .692 Aramit Cement = .351
4) Turnover ratio : i) inventory turnover ratio Lafarge Surma Cement =4.63times Inventory holding period = 2.59 months Confidence Cement = 5.940times Inventory holding period = 2.019months Aramit Cement = 7.400times Inventory holding period = 1.621months 3) Debtors turnover ratio : Lafarge Surma Cement= .710 Confidence Cement = 1.244 Aramit Cement=1.244 3) Creditors turnover ratio : Lafarge Surma Cement = 1.197 Confidence Cement = 0.0223 Aramit Cement = 1.416
2. Capital Structure / leverage ratio 1. Debt to Equity Ratio Lafarge Surma Cement =2.902 Confidence Cement = .747 Aramit Cement = 9.754
Coverage Ratio : 1) Interest coverage Lafarge Surma Cement = 1.157 Confidence Cement = 2.140 Aramit Cement = 1.667
Profitability Ratios Profitability ratios related to sales : Profit Margin : 1) Gross profit margin
Lafarge Surma Cement = 32.32% Confidence Cement = 18% Aramit Cement = 23.081%
Net profit margin 1) Operating profit ratio
Lafarge Surma Cement = .086 Confidence Cement = .0151 Aramit Cement = .1225
1) Net profit ratio Lafarge Surma Cement= .1319 Confidence Cement = .1180 Aramit Cement = .0719 2. Expenses Ratio i) COGS ratio : Lafarge Surma Cement= 61.74% Confidence Cement = 81.16% Aramit Cement = 76.91%
2) Operating expenses ratio : Lafarge Surma Cement = 6.65 Confidence Cement = 3.63
Aramit Cement = 3.75
2) Administrative expenses ratio Lafarge Surma Cement= 4.995% Confidence Cement = 2.663 Aramit Cement = 1.698
4) Selling expenses ratio Lafage Surma Cement= 1.656% Confidence Cement = .974 Aramit Cement = 2.055 5) Financial expenses ratio Lafage Surma Cement= 11.544 Confidence Cement = 6.93 Aramit Cement = 7.344 Profitability Ratios related to investments : Return investments (ROI) 1) Return on Assets (ROA) Lafage Surma Cement= .0566 Confidence Cement=.2369 Aramit Cement = .0884 2) Return on capital employed (ROCE) Lafage Surma Cement= .05688 Confidence Cement = .1147 Aramit Cement = .3872 Return on shareholder’s equity : Lafage Surma Cement= 0.1306 Confidence Cement= .0656 Aramit Cement= 1.351
Activity ratio / Efficiency ratio 1) Inventory turnover ratio Lafarge Surma Cement = 3.97t Inventory holding period= 3.02m Confidence Cement= 5.940 Inventory holding period = 2.02m Aramit Cement = 7.402 times Inventory holding period= 1.62 m 2) Receivable turnover ratio Debtors turnover Lafage Surma Cement= 13.81 times Inventory holding period =.86months Confidence Cement = 7.579times Inventory holding period = 1.5months Aramit Cement = 8.443times Inventory holding period = 1.421months 3) Assets turnover ratio Lafarge Surma Cement = .265times Inventory holding period = 45.28months Confidence Cement = 1.628t Inventory holding period = 7.37m Aramit Cement = 0.9456times Inventory holding period= 12.69m Conclusions & Recommendations In FY 1980-81,the contribution of the board industry sector to real GDP was 17.31% which has increased to 29.73% in FY 2008-2009.Cement industry in the new sector of industrial sector of Bangladesh. It has passed only 18 years. The trend of growth and performance of cement industry rapidly increase day by day during the 18 years. The findings and solutions section of the report shows that the production , sale and investment of the cement company increased day by day due to some barriers like increase price of raw material, low price of cement in the world.
This industry also develop some other manufacturing company like “Shoven bag manufacturing company, Miracles, Sino Bangla”. This company make woven bags by importing raw materials .It supplies the bag in local and foreign market. Bangladesh is set to export cement bag for the first time to India diversifying the country’s export basket. It also try to export South American countries like Brazil and Paru. Cement sector of Bangladesh has huge growing possibilities. The sector has grown day by day with huge prosperity. Some actions will take to increase its success like•
Bangladesh government takes initiatives like tax and tariff material
•
Provide subsidiary and easy loan for the sector
•
All company should huge marketing strategies for domestics and foreign investment
free import of raw
The cement industry will play a major role for earnings foreign remittance with the help of increasing growth and performance and also make strong economy for our loving motherland.