Submitted to:Prof Dr. Muhammad Loqman

Chief, IIUC, Dhaka Campus & Supervisor

Submitted By:Nusrat Sultana

Metric No- M082903Batch & Section: 29 C

MBA Program

Internship Report

PERFORMANCE TREND & IMPLICATIONS OF FINANICIAL STATEMENT ANALYSIS:

A STUDY ON BEXIMCO PHARMACEUTICALS LTD. (BPL)

International Islamic University Chittagong (IIUC), Dhaka Campus

Origin of the Report

The particular topic has been chosen because –ratio analysis enables the business owner and managers to identify trends in a business by comparing the businesses own ratio for several successive years.

By comparing a company’s performance with average industry performance, ratio analysis acts as an early warning indicator for emerging unfavorable trends. Further more, from the ratio analysis, potential investors & creditors can have a better understanding of how the company is doing financially & thus make more informative decisions.

Statement of the Problem

Objectives & Goals • To identify any existing or emerging trends of Beximco Pharma by comparing business’s own ratios for successive 4 years (2006-2009).

• To perform ratio analysis of BPL.

• To compare its performance with the average industry performance.

• To identify whether it is a sound decision for investors to invest in the company & for creditors to lend the company.

• To suggest ways of improving the performance of the company.

Statement of the Problem

Methodology

Analysis of the financial statements of the last 4 years (2006-2009) was conducted and taken into consideration in drawing conclusions.

Primary information: The documented information from the annual reports, personal interviews, performance reviews, statistical data etc. Secondary literature: The main sources of secondary data were books, newspaper articles, journal & the internet.

Statement of the Problem

Overview Of Bangladesh Pharma Market

• Is one of the fastest growing sectors.

• From an import dependent country back in ’70s, it is now almost self sufficient industry meeting 97% of domestic demand

• Huge export potentials

•Total market size was BDT 5500 Crore in 2009 with 17% growth. & 216 registered pharma manufacturers.

Moreover, Bangladesh pharma industry is • the 3rd highest contributor to the national exchequer• the largest white-collar employment sector• a Branded Generic market, with about 600 registered generics/ molecule & 7000 brands /items• local manufacturers dominated, currently occupying 83% market share, • MNCs share are declining (currently 17% share). • No MNC in the current top-10 list.

• a leading pharma company based in Dhaka • a member of BEXIMCO Group, the largest private sector industrial conglomerate in Bangladesh.

Overview

Principal activities - • manufacturing & marketing of finished products (medicines), bulk raw materials and IV fluids.

• contract manufacturing arrangement for leading MNCs.

Overview

is acclaimed for its product quality, world-class manufacturing facilities, product development capabilities and professional services.

is supplying about 8% of country's medicine need.

is the largest exporter of pharma products and has received National Export Trophy (Gold) for record 3 times.

produces and markets medicines for almost all diseases from AIDS to cancer, from Infection to Asthma, from Hypertension to Diabetics, to the local market and International Market.

In Beximco Pharma, 3 types of methods or viewpoint are used to Analyze the Financial data for identifying the comparative and relative significance – which are :

1. Comparative analysis 2. Percentage (common size) analysis and 3. Ratio analysis

Performance Trend Analysis of BPL

Ratio 2009 2008 2007 2006

1. Liquidity Ratio

a. Current Ratio 2.98 times 1.10 times 1.80 times 1.33 times

b. Quick ratio 2.24 Times 0.52 Times 0.78 Times 0.63 Times

c. Current Cash Debt Coverage Ratio

0.46 0.02 0.05 0.22

2. Activity ratio

a. Receivable Turnover 7.01 Times 7.96 Times 7.74 Times 6.12 Times

b. Receivable Turnover in Days 52 days 46 days 47 days 60 days

c. Inventory Turnover 1.59 Times 1.27 Times 1.16 Times 1.15 Times

d. Inventory Turnover in Days 230 Days 288 Days 316 Days 318 Days

e. Asset Turnover 0.29 Times 0.30 Times 0.30 Times 0.32 Times

3. Profitability

Ratio

a. Gross Profit margin 47% 50% 45% 47%

b. Net profit margin 19% 14% 10% 13%

b. Return on asset or Return on Investment

4% 4% 3% 4%

The Ratios at a Glance

Ratio 2009 2008 2007 2006

4. Debt-coverage

ratio

a. Debt to total assets 45% 24% 25% 27%

b. Time interest earned 3.57 Times 3.54 Times 3.60 Times 3.84 Times

c. Book value per share 72 93 86 83

5. Price earnings

5. Price earnings ratio 37.72 46.45 21.04 13.06

Market Price of Stock 155.80 167.70 58.89 53.70

Earnings per share 4.13 3.61 2.80 4.11

The Ratios at a Glance

The 4 years financial data show a slow growing trend of the company. Beximco Pharma is a well-established and leading Pharmaceuticals firm of the country.

Although BPL is run by an experienced management group, it could not use it full potential due to some other internal & external crisis.

Summary Findings

• BPL’s should try for better inventory management.

• Better inventory management would also improve the company’s extremely low inventory turnover ratio. The company could compute turnover of the major inventory categories to identify the excessive stock of any specific items and then take appropriate action to rectify the problem.

• It needs to be more efficient in collecting receivables; reviewing the credit policy and making necessary adjustments may encourage prompt payment.

• BPL needs to establish a healthy balance between debt and equity; too much debt financing would lead to high financial risk, while too little debt financing would lead to difficulty in raising funds.

• BPL also needs to improve its earnings before interest and taxes (EBIT) by increasing sales revenue or decreasing production and operating expenses.

• To improve its return on investment (ROE), the company needs to take advantage of profitable investment opportunities and be more efficient at managing its expenses.

• The company needs to improve its earning per share (EPS) and dividend per share (DPS) significantly. It also needs to lower its dividend payout ratio as it may limit the company’s growth potential.

Recommendations

Thank you all