Body - Internship Report on Ejab Group

8/20/2019 Body - Internship Report on Ejab Group

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Contents

1.0 Introduction ............................................................................................................................... 1

1.1 Issue ....................................................................................................................................... 1

1.2 Origin of the Report .............................................................................................................. 2

1.3 Objective: .............................................................................................................................. 3

1.3.1 Broad objective: .............................................................................................................. 3

1.3.2 Specific objectives: ......................................................................................................... 3

1.4 Scope: .................................................................................................................................... 3

1.5 Limitation: ............................................................................................................................. 3

1.6 Methods of data collection .................................................................................................... 4

1.7 Data Analysis Techniques ..................................................................................................... 42.0 Company Overview .................................................................................................................. 4

2.1 Ejab Group and its Business Units ........................................................................................ 4

2.2 Vision, Mission & Objective ................................................................................................. 9

2.2.1 Vision.............................................................................................................................. 9

2.2.2 Mission ........................................................................................................................... 9

2.2.3 Objectives ..................................................................................................................... 10

2.3 Corporate Social Responsibilities (CSR) ............................................................................ 10

3.0 Research Part .......................................................................................................................... 11

3.1 Literature Review ................................................................................................................ 11

3.2 Analysis ............................................................................................................................... 12

3.2.1 Composition of Balance Sheet: Himadri Limited ........................................................ 12

3.2.2 Composition of Balance Sheet: Golden Harvest Agricultural Industries Limited(GHAIL) ................................................................................................................................ 14

3.2.3 Assessment of Financial Ratios .................................................................................... 16

4.0 Findings................................................................................................................................... 29

5.0 Recommendations and Conclusion ......................................................................................... 32

Appendix ....................................................................................................................................... 33

Reference ...................................................................................................................................... 41


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1.0 Introduction

1.1 Issue

All the strategic business units of Ejab Group including Himadri Limited are private limited

companies. This a medium sized firm. Currently it has 7 potato cold storages all in the North of

Bangladesh, in Rangpur, Shibganj, Upson (Bogra), Battoli (Khetlal, Joypurhat), Jagannathpur

(Thakurgaon), Gobindaganj (Gaibandha) and Komorpur (Birganj, Dinajpur). Future plan is to

increase the number of cold storages in different locations of Bangladesh and also expand the

product range of items that can be stored other than potatoes like some fruits and vegetables.

Golden Harvest Agro Industries Limited, on the other hand, is a public listed company that owns

and controls the country’s first frozen food processing plant. Although Himadri Limitied andGolden Harvest Agro Industries Limited are operating in similar industries, Golden Harvest Agro

Industries Limited is huge. The company’s supply process links directly or indirectly with over

100,000 Bangladeshi agricultural partners who provide 95% of the company’s raw materials. This

nationalistic approach has satisfied the company’s duty to its domestic economy and values whilst

exporting products and services in the global market. Golden Harvest Agro Industries Ltd

(GHAIL) processes over 75 varieties of premium quality frozen food products of vegetables, ready

to eat foods, finger foods and more. The facility is an ISO 9001:2008 and BRC (British Retail

Consortium) certified. Golden Harvest Agro Industries Ltd. is the country’s leading frozen food

supplier possessing an extensive network of temperature controlled fleet transportation system.

The company distributes nationwide and exports to USA, Canada, Australia, Middle East and the

European countries, maintaining a temperature of -18 ⁰ C. Golden Harvest Agro is currently setting

up the nation’s first ever largest cold chain network under the GDA program with the support of

USAID. The project is estimated at over 50 million USD.

A private limited company has its merits and demerits in terms of financial performance. Similarly,

a public limited company has its unique pros and cons as well. There are differences in their

financial performances. Financial performance is a subjective measure of how well a firm can use

assets from its primary mode of business and generate revenues. This term is also used as a general

measure of a firm's overall financial health over a given period of time, and can be used to compare

similar firms across the same industry or to compare industries or sectors in aggregation. There


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are many different ways to measure financial performance. Line items such as revenue from

operations, operating income or cash flow from operations can be used, as well as total unit sales.

Financial ratios are the best tools for measuring financial performance. This study will endeavor

to unveil the differences in financial performance of Himadri Limited as a private limited company

and Golden Harvest Agro Industries Limited as a public limited company. In simple words, how

good Himadri Limited is doing as a medium private limited company compared to Golden Harvest

Agro Industries Limited, a large public limited company will explored with the help of few key

financial ratios.

1.2 Origin of the Report

Internship Program is a graduation requirement for the BBA students of BUP. This study is a

partial requirement of the Internship program of BBA curriculum at BUP. The main purpose of

internship is to get the students exposed to the corporate world. Being an intern, the main challenge

is to translate the theoretical concepts learned in classrooms into real life experience in real life

working environment.

The internship program and the study have the following purposes:

i. To get knowledge of the job responsibilities of our respective fields

ii. To experience the real corporate world

iii. To compare and use what we learned in classrooms in real life scenario

iv. To fulfill the requirement of BBA Program

This report titled “Comparative Study of Financial Performance between Himadri Limited – A

Concern of Ejab Group – and Golden Harvest Agro Industries Limited” is the result of 10 weeks

long internship program conducted at Ejab Group and is prepared as a requirement for the

completion of the BBA program of BUP. This report is based on and includes information acquired

during the internship period at Ejab Group.


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1.3 Objective:

1.3.1 Broad objective:

To compare the financial performance of Himadri Limited and Golden Harvest AgriculturalIndustries Limited

1.3.2 Specific objectives:

i. To calculate out the key financial ratios of Himadri Limited

ii. To calculate the key financial ratios of Golden Harvest Agro Industries Limited

iii.

To interpret the ratios and compare the firms using the interpretation of the ratios

1.4 Scope:

The scope of the research is limited to the Agricultural and Food Processing sector of Bangladesh

and the findings and results of the research are applicable to only Himadri Limited and may not

apply to other similar or competitive companies. The main focus will be to compare the financial

performance of Himadri Limited and Golden Harvest Harvest Agro Industries Limited primarily

using ratio analysis.

1.5 Limitation:

The limitations faced in preparing the report are:

i. Time: The report has to be completed in 10 weeks. This time is insufficient for preparing

a standard report with high precision.

ii. Resource: As the research is self-funded, the collection of specific data was done on a

limited scale.

iii. Availability of Data: Much of the company and market reports are not easily available.

iv. Accessibility: As Himadri Limited is a private limited company, Ejab Group was reluctant

to disclose any information in order to maintain confidentiality.

v. Researcher: As a novice researcher, I have a lack of experience, expertise and knowledge.


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1.6 Methods of data collection

All the data used in this report are collected from secondary and tertiary sources like company

reports and information available in internet. The analysis used in this report is based on mainly

qualitative analysis.

1.7 Data Analysis Techniques

After the data has been collected the following financial analytical tools has been used to compare

the financial performance. The tools that used are as follows:

a. Key Profitability Ratios:

i. Gross Profit Margin

ii. Net Profit Margin

iii. Return on Assets

iv. Return on Capital Employed

b. Key Liquidity Ratio

i. Current Ratio

c. Key Financial Position Ratios

i. Capital Gearing Ratio

ii. Debt Ratio

iii. Interest Cover

d. Key Efficiency Ratio

i. Asset Turnover Ratio

2.0 Company Overview

2.1 Ejab Group and its Business Units

In the year 1959, Late Engineer Ejabuddin Ahmed gave birth to Ejab Group with the establishment

of National Construction Company (now defunct), National Jute Mills Limited (1968) and over

the years gained recognition with Himadri Limited (1974), a potato cold storage and finally Rabeya

Flour Mills Limited in 1978.


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Involving itself in the fields of Jute based products, Edible Oil Mill, Rice Mill and Potato Cold

Storages, Ejab Group went a step ahead with adding wide range of processed food products.

Adding another new venture is its own Seed processing expertise by which we produce potato,

rice, maize, wheat and vegetable seeds. Through our distribution network, we not only distribute

our own products but also distribute Cepsa Lubricants, a product of Spain. The group is also

involved in Real Estate and Housing Development under the name of Ejab Developers Ltd. (EDL).

Based on the increasing changes in the consumer behavior, Ejab Group is open to take any

necessary changes and steps to help enhance its business policies and planning. With a

commitment to provide social services through its products, Ejab Group strongly adheres to its

motto: "No Compromise with Quality". In its existence of over 50 years, Ejab Group has branched

into 11 Companies under its four divisions.

The four divisions are:

A. Agro Division

B. Food Division

C. Real Estate Division

D. Distribution Division

The 11 Companies are:

A. Himadri Ltd. (1974) – 6 Units

B. Rabeya Flour Mills Ltd. (1980) – 2 Units

C. Northern Agricultural & Industrial Co. Ltd. (2002) – 4 Units

D. Multipurpose Himadri Agro Processing Co. Ltd. (2005) – 2 Units

E. Ejab Alliance Ltd. (2005) – 1 Unit

F. Ejab Foods Ltd. (2006) – 3 Units

G. Ejab Trading Co. Ltd. (2006) – 1 Unit

H. Ejab Developers Ltd. (2006) – 28 Units

I. Ejab Distribution Ltd. (2007) – 1 Unit

J. Ejab Agro Ltd. (2010) – 2 Units

K. Munchy Food & Beverage Ltd. (2011) – 1 Unit


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A. Himadri Limited

“Himadri Limited” and “Multipurpose Himadri Agro - Processing Co. Ltd” currently have 7 potato

cold storages all in the North of Bangladesh, in Rangpur, Shibganj, Upson (Bogra), Battoli(Khetlal, Joypurhat), Jagannathpur (Thakurgaon), Gobindaganj (Gaibandha) and Komorpur

(Birganj, Dinajpur). Future plan is to increase the number of cold storages in different locations of

Bangladesh and also expand the product range of items that can be stored other than potatoes like

some fruits and vegetable.

B. Ejab Agro Ltd.

Ejab Agro Ltd. (formed in 2010) is involved in following activities: Tissue Culture Lab, seed production and marketing. The products of this company are potato plantlet, potato mini tuber,

potato seed of different generation (starting from basic to certified), high yielding rice seed, hybrid

rice seed, etc. although our seed business started in 2007 under the banner of Northern Agricultural

& Industrial Co. Ltd. But eventually Ejab Agro Ltd. was formed to give it more focus and emphasis

on the seed business. It sincerely believes that the seed market is developing day by day with

awareness of quality seed by the farmers and with limited land area the national challenge is to

ensure maximum production/yield in given area. This is where quality seed will play key role in

days to come.

C. Multipurpose Himadri Agro-processing Co. Ltd. (MHAL)

The company was formed in 2005 is located in Birgonj, Dinajpur with a view to get involved in

various agro-based businesses. Currently its activities are limited to cold storage of seed & table

potato and contract farming of processing variety potato. But in future it plans to expand its

contract farming program to produce aromatic rice, maize, soya bean, mustard seed, various spices,

etc. and contribute in backward linkage for our other food & agro processing units. It also has plan

to set-up automatic rice plant in its existing facility.

D. Ejab Foods Limited


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The company was formed in 2006. Although it is yet to come into operation but it has empty plots

in baliadangi, thakurgaon and ashulia, Savar. The nature of business would be to produce

pasteurized milk, U.H.T. milk, milk based products like sweet, yoghurt, yoghurt drink, ice cream,

fruit juice, bottle water, rice bran oil, etc.

E. Ejab Alliance Limited

This cattle breeding farm is situated in Thakurgaon under the name Ejab Alliance ltd., established

in 2004. The activities include semen collection and processing it for Artificial Insemination to

improve the future variety of cattle in Bangladesh. At the moment we have 7 numbers of Australian

Holstein Frisian Bulls in our farm. It has more than 450 highly skilled Artificial Insemination

workers all over the country. This is the only project of its kind in private sector. Our rate of

success since its inception is higher than other Government and Non-Government Organization

owned establishment for such purpose. Nature of business is production of Semen from F1 & F2

generation Bull stock. Its future plan is to Composite Dairy Plant

F. Northern Agricultural & Industrial Co. Ltd.

i. Sonapukur Unit

Sonapukur unit at Dinajpur, was established in 2010, adjacent to the flourmill. In this unit

following products are produced: Mustard Oil, cooking spices, Toast biscuits, vermicelli. Its future plans include processing different fruits and vegetables grown in North Bengal, like mango,

tomato, olive, etc. into pickles and ketchup.

ii. Uttam, Kellabondh, Rangpur Unit

NAICOL Rice Mill - Uttam, Kellabondh, Rangpur Unit was established in the year 2011. It is an

automatic rice mill with the facility of making Parboiled rice and Atop (unboiled) rice. It processes

fine Aromatic rice, coarse rice, for both local and Export market. Its future plans include expandingthe production capacity and processing rice bran into oil. Upcoming products include Quality

Miniket, Quality Nazirshail, NAICOL Chinigura, NAICOL Banglamoti

iii. Ashulia, Savar Unit


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NAICOL Ashulia, Savar Unit was established in the year 2005. It is a state of the art factory where

Custard cake, Candy, Spicy snacks, Potato snacks and Bombay Mix. Are produced. Future plans

include expansion of production units as per growing demand to meet the consumer satisfaction.

G. Rabeya Flour Mills Limited

Rabeya Flour Mills Limited established in 1978, is situated in Sonapukur (adjacent Syedpur

Town), Parbatipur, Dinajpur. It was one of the first major automatic flourmills in the country

producing fine flour, Coarse flour, Vitamin fortified Flour, Whole wheat flour, Semolina and Bran.

With the growing demand of our produce in the market, it has gone into expansion over the years.

Key brand is Quality and Rabeya. Future plans include setting up Feed mill, Woven PP, Leno

mesh bag industries

H. Munchy Food & Beverage Ltd.

"Munchy Food & Beverage Ltd." is an automatic biscuit industry situated at BISIC Industrial Area,

Moktarpur, Munshigonj. Future plans include product diversity and export.

I. Ejab Foods Limited

The company was formed in 2006. Although it is yet to come into operation, it has empty plots in

Baliadangi, Thakurgaon and Ashulia and Savar. The nature of business would be to produce

pasteurized milk, U.H.T. milk, milk based products like sweet, yoghurt, yoghurt drink, ice cream,

fruit juice, bottle water, rice bran oil, etc.

J. Ejab Developers Ltd.

Ejab Developers Ltd. (EDL) always uses renowned, tested and certified building materials for its

projects. However, we also prefer the clients' choice on building material selection including

interior designs and fittings. We have a team of qualified and dynamic architects to meet theclients’ dream and make it a reality with great integrity. It believes post -handover services to be

as important as the construction of your home. EDL always cares about the proper maintenance of

the complex with its routine supervision team to ensure the valued clients' safety and security. The

on-spot solution service for the clients' recommendations and instructions are always given FIRST

priority.


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K. Ejab Distribution Ltd

The company was formed in 2007 with a vision to work as marketing company of the food

products produced in our different food units. Currently it has a sales team, depots in different

locations and vehicles covering the entire nation under this company. In 2008 Ejab DistributionLtd. came into an agreement with CEPSA Lubricants, Spain to market its petroleum products in

Bangladesh. Although contrast to its existing business, looking at the growing industrial market,

especially in power generation sector the company decided to venture in the business. When first

launched in the market we were focused in the automotive market but in past 3 years the focus has

shifted to industrial market and the response from our clients have been positive. It believes like

all other products even quality petroleum products will have opportunity in future with public

awareness and government regulation.

L. Ejab Trading Co. Ltd.

The company was formed in 2006 with a vision to do trading of commodities like wheat, maize,

rice, soya bean, mustard seed, etc. as these products are grown once in a year thus have seasonal

effect of price and availability.

2.2 Vision, Mission & Objective

2.2.1 Vision

To be one of the top 10 leading conglomerates by 2020 by providing superior quality products and

services and developing an enduring and transformational relationship with all key stakeholders

2.2.2 Mission

a. To provide growth and profitability to our shareholders.

b. To provide a challenging work environment this gives our employees pride and dignity.c. To have a win-win growth for all our partners working with us.

d. To work with farmers as their caring long term partner.

e. To achieve market leadership and operating excellence by continuously providing our

consumer with quality product and services.


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2.2.3 Objectives

a. To meet the latent demand of the consumers.

b. To increase growth through quality product & Service.

c. To maximize the utilization of existing wealth.

2.3 Corporate Social Responsibilities (CSR)

As Ejab Group has always been self-committed to help the under-privileged masses of the society,

particularly in the fields of education, building moral & religious values, growing up &

rehabilitation of orphans, we have established and still run a number of educational & religious

institutions and workshops in different places of Bangladesh. Ejab Group with its helpful hands

has always helped the poor in many ways by distributing rice, flour, clothes, even money to dowryaffected families. Ejab Group regularly conducts Workshops, Training Programs, and Seminars

etc. at its Project Sites. With a view to growing more crops under the auspices of Agricultural

Consultancy Division headed by Agro-graduates, these initiatives are aimed to touch every

farmer’s life with knowledge and awareness for better farming in order to enrich their lives. Its

institutions are as follows:

i. Begum Rabeya Ahmed Girls’ High School, named after our Ex -Managing Director Begum

Rabeya Ahmed.ii. Samiruddin Memorial Degree College, named after our Founder Late Engr. Ejabuddin

Ahmed’s father.

iii. Hasina Memorial Child Orphanage, being run in memory of our Founder Managing

Director Late Engr. Ejabuddin Ahmed’s mother.

iv. Baitul Ejab Jame Mosque.

v. Moheshmari Central Mosque.

vi. Stipends to poor and Meritorious Students of Higher Studies under the banner of Emdad

Ahmed Afzal Memorial Trust and Begum Rabeya Ahmed Trust are provided.

vii. Thakurgaon Diabetic Hospital.

viii. Conducting Eye Camps at different places of Thakurgaon.

ix. Hostel beside the Samiruddin Memorial Degree College

x. Vocational Training Center (Proposed)


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xi. Child & Maternal Health Care Center in Moheshmari (Proposed)

3.0 Research Part

3.1 Literature Review

The comparison that shows the relationship between two amounts is basically known as ratio. The

major financial information of a business brought out from the balance sheet and income sheet so

that this statements are the principal sources that are mainly used to calculate the financial ratios

(Dong Jin Kim, 2006). Andrew and schmidgall (1993) categorized the financial ratios into

different types for the hospitality industry; Solvency ratios, Liquidity ratios, Profitability ratios

and Operating ratios. Comparison of financial ratios of different firms from different countries is

conducted by Meric et al. with the help of his collegues (Meric et all., 1997; 2002; 2004). Thereare many scholars and researchers like Smith, 1997; Zaman & Unsal, 2000; Locke & Scrimgeour,

2003, also did the same study (Dond Jin Kim, 2006). Dong Jin Kim also concludes that the

comparison of financial characteristics of different industries from different countries is

understandable because the firms of these segments are intrinsically homogeneous. The result of

investigation by Andrew, (1993) through the leverage ratio of restaurants and hotels shows that in

restaurants segment the value maximizing capital structure would be between 45% and 55% but

in hotels this ratio would be between 55% and 60%.Hales J. (2005) argues that in hotels industry

to assess the future it is necessary to financial analyze the past performance of hotel. These analysis

reports should be daily, weekly, monthly and quarterly, but the monthly reports are more important

because these are examined by the internal as well as the external analysts. Jangels & Ralston

(2006) argue that the managers of internal operations, the shareholders of organization and current

creditors are those groups who are interested in the financial ratio analysis. Financial ratios permit

an analyst the right of use not just the absolute value of the relationship and also measure the

variance within the relationship (Lawder, 1989). From the management point of view the

justification for the use of financial ratio analysis is that we express many figures in the form ofratios, and that information which is missed will be revealed after the individual members are

observed (Thomas & Evanson, 1987). And then that information can be used by the managers for

the improvement of their operations. Auditors can also use ratios for conducting an analytical

review of their clients (Gardiner, 1995). We get numerous amount of information from the balance


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sheet and income statement, it is also possible to develop an infinite number of ratios and items

related to income statement and to each other, also items of balance sheet to each other, and as

well as with the items of one statement to the items of other statement. However, the various items

present in the financial statements are mostly highly correlated with each other so that the financial

ratios are highly correlated with one another (Horrigan, 1996; Zeller & Stanko, 1997).

3.2 Analysis

To analyze the financial performance of the companies at hand, we will delve into the composition

of assets, equity and liabilities of each company and compare the composition between year 2014

and 2015. We will then focus on scrutinizing the profitability of each company using four key

profitability ratios – gross profit margin, net profit margin, return on assets and return on capital

employed. We will look into its liquidity through current ratio. Afterwards, focus would be shiftedto exploring the financial position of each company using three key financial position ratios –

capital gearing ratio, debt ratio and interest cover. We will look into its efficiency through asset

turnover ratio. These would give us enough insight of the financial performance of the companies

in question and facilitate superior comparison.

3.2.1 Composition of Balance Sheet: Himadri Limited

Balance Sheet of Himadri Limited shows the current assets over total assets are 1% in 2014, and

non-current assets was 99%. In 2015, the current assets constituted 7% of the total assets and non-

current assets was 93%. This shows the percentage of current assets increased by six units. The

following pi-charts clearly demonstrates the composition of assets:


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In 2014, the total current liabilities 9% of the total equity and liabilities. Corresponding non-current

liabilities was 1%, and equity was 90%. In 2015, the total current liabilities 12% of the total equity

and liabilities. Corresponding non-current liabilities was 1%, and equity was 87%. The following

pi-charts clearly demonstrates the composition of equity and liabilities:

The balance sheet of Himadri Limited can be found in the appendix. The following diagram shows

the changes in Balance Sheet Account graphically and in more detail:

Non-CurrentAssets

99%

CurrentAssets

1%

2014

Non-CurrentAssets

93%

CurrentAssets

7%

2015

Equity87%

CurrentLiabilitie

s12%

Non-CurrentLiabilitie

s1%

2015

Equity90%

CurrentLiabilities

9%

Non-Current

Liabilities1%

2014


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3.2.2 Composition of Balance Sheet: Golden Harvest Agricultural Industries Limited (GHAIL)

Balance Sheet of GHAIL shows the current assets over total assets are 35% in 2014, and non-

current assets was 65%. In 2015, the current assets constituted 30% of the total assets and non-

current assets was 70%. This shows the percentage of current assets decreased by 5 units. The

following pi-charts clearly demonstrates the composition of assets:

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

Non-CurrentAssets

Current Assets Total Assets Equity CurrentLiabilities

Non-CurrentLiabilities

Total Liabilities

The changes in the main balance sheet accounts of HimadriLimited

2015 2014


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In 2014, the total current liabilities 27% of the total equity and liabilities. Corresponding non-

current liabilities was 6%, and equity was 67%. In 2015, the total current liabilities 26% of the

total equity and liabilities. Corresponding non-current liabilities was 7%, and equity was 677%.The following pi-charts clearly demonstrates the composition of equity and liabilities:

The balance sheet of GHAIL can be found in the appendix. The following diagram shows the

changes in Balance Sheet Account graphically and in more detail:

Non-CurrentAssets

70%

CurrentAssets

30%

2015

Non-CurrentAssets

65%

CurrentAssets

35%

2014

Equity67%

CurrentLiabilities

26%

Non-Current

Liabilities7%

2015

Equity67%

CurrentLiabilities

27%

Non-Current

Liabilities6%

2014


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3.2.3 Assessment of Financial Ratios

To evaluate the strength and weakness of company and to evaluate the trend of business the ratios

are very helpful. We will scrutinize the profitability of each company using four key profitability

ratios – gross profit margin, net profit margin, return on assets and return on capital employed.

We will look into its liquidity through current ratio. Afterwards, focus would be shifted to

exploring the financial position of each company using three key financial position ratios – capital

gearing ratio, debt ratio and interest cover. We will look into its efficiency through asset turnover

ratio. These would give us enough insight of the financial performance of the companies in

question and facilitate superior comparison.

0

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

Non-CurrentAssets

Current Assets Total Assets Equity CurrentLiabilities

Non-CurrentLiabilities

Total Liabilities

The changes in the main balance sheet accounts of GHAIL

2015 2014


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3.2.3.1 Profitability Ratios

A profitability ratio is a measure of profitability, which is a way to measure a company's

performance. Profitability is simply the capacity to make a profit, and a profit is what is left over

from income earned after costs and expenses related to earning have been deducted from theincome.

A. Gross Profit Margin

=

This ratio is used to assess a firm's financial health by revealing the proportion of money left over

from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source

for paying additional expenses and future savings. The following table shows the gross profit

margin of Himadri Limited and GHAIL:

Himadri GHAIL

2015 2014 2015 2014

Sales Revenue 80250145 33108874 256,095,176 184,546,936

Gross Profit 32,277,457 -14,381,574 111,367,441 63,685,302

Gross Profit Margin 0.4022 -0.4344 0.4349 0.3451

Himdri’ s revenue in 2015 is much higher than it is in 2014. In 2015, it made some profit although

in 2014 it made loss. It recovered in 2015. Therefore, its gross profit margin in 2015 is positive,

while in 2014 it is negative. For every taka earned in 2015, Taka 0.4022 gross profit was made.

For every taka earned in 2014, Taka 0.4344 worth of loss was incurred. The corresponding figures

for GHAIL are similar in 2015 . Hence, compared to GHAIL’s gross profit margin, the Himadri’s

is similar in 2015. The following chart clearly depicts the differences:


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B. Net Profit Margin

= ( )

Net profit margin is the percentage of revenue left after all expenses have been deducted from

sales. The measurement reveals the amount of profit that a business can extract from its total sales.

The following table shows the net profit margin of Himadri Limited and GHAIL:

Himadri GHAIL

2015 2014 2015 2014

Sales Revenue 80,250,145 33,108,874 256,095,176 184,546,936

Net Profit 583,797 -46,800,819 9,350,195 18,516,750

Net Profit Margin 0.0073 -1.4135 0.0365 0.1003

Himdri’s revenue in 2015 is much higher than it is in 2014. In 2015, it made some profit although

in 2014 it made loss. Therefore, its gross profit margin in 2015 is positive, while in 2014 it is

negative. For every taka earned in 2015, Taka 0.0073 net profit was made. For every taka earned

0.4022

-0.4344

0.4349

0.3451

-0.6000 -0.4000 -0.2000 0.0000 0.2000 0.4000 0.6000

2015

2014

2015

2014

H i m a d r i

G H A I L

Gross Profit Margin


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in 2014, Taka 1.4135 worth of net loss was incurred. The corresponding figures for GHAIL are

favorable. Hence, compared to GHAIL’s net profit margin, the Himadri’s is below par. The

following chart clearly depicts the differences:

C. Return on Assets (ROA)

=

The return on assets ratio, often called the return on total assets, is a profitability ratio that measures

the net income produced by total assets during a period by comparing net income to the average

total assets. In other words, the return on assets ratio or ROA measures how efficiently a companycan manage its assets to produce profits during a period. Since company assets' sole purpose is to

generate revenues and produce profits, this ratio helps both management and investors see how

well the company can convert its investments in assets into profits. The following table shows the

return on assets of Himadri Limited and GHAIL:

0.0073

-1.4135

0.0365

0.1003

-1.6000 -1.4000 -1.2000 -1.0000 -0.8000 -0.6000 -0.4000 -0.2000 0.0000 0.2000

2015

2014

2015

2014

H i m a d r i

G H A I L

Net Profit Margin


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Himadri GHAIL

2015 2014 2015 2014

Operating Profit 12,491,951 -33,001,732 78,261,099 29,332,086

Total Assets 632,700,684 609,006,401 1,811,195,450 1,381,142,334

Return on Assets 0.0197 -0.0542 0.0432 0.0212

In 2015, Himadri made some profit although in 2014 it made loss. Its assets did not change much

in two years. Therefore, its ROA in 2015 is positive, while in 2014 ROA is negative. In 2015,

every taka worth of asset earned Taka 0.0197. In 2015, every taka worth of asset made a loss of

Taka 0.0542. The corresponding figures for GHAIL are much favorable. Hence, compared to

GHAIL’s ROA, the Himadri’s is below par. The following chart clearly depicts the differences:

D. Return on Capital Employed (ROCE)

=

0.0197

-0.0542

0.0432

0.0212

-0.0600 -0.0400 -0.0200 0.0000 0.0200 0.0400 0.0600

2015

2014

2015

2014

H i m a d r i

G H A I L

Return on Assets


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Return on capital employed or ROCE is a profitability ratio that measures how efficiently a

company can generate profits from its capital employed by comparing net operating profit to

capital employed. In other words, return on capital employed shows investors how many takas in

profits each taka of capital employed generates. ROCE is a long-term profitability ratio because it

shows how effectively assets are performing while taking into consideration long-term financing.

This is why ROCE is a more useful ratio than return on equity to evaluate the longevity of a

company. The following table shows the return on capital employed of Himadri Limited and

GHAIL:

Himadri GHAIL

2015 2014 2015 2014

Operating Profit 12,491,951 -33,001,732 78,261,099 29,332,086Capital Employed 555,019,215 555,335,418 1,256,849,656 992,715,658

Return on Capital Employed 0.0225 -0.0594 0.0623 0.0295

In 2015, it made some profit although in 2014 it made loss. Its capital employed did not change

much in two years. Therefore, its ROCE in 2015 is positive, while in 2014 ROA is negative. In

2015, every taka worth of capital employed generated Taka 0.0225. In 2015, every Taka worth of

capital generated a loss of Taka 0.0594. The corresponding figures for GHAIL are greater. Hence,

compared to GHAIL’s ROCE, the Himadri’s is below par. The following chart clearly depicts thedifferences:


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3.2.3.2 Liquidity Ratios

Liquidity ratios analyze the ability of a company to pay off both its current liabilities as they

become due as well as their long-term liabilities as they become current. In other words, these

ratios show the cash levels of a company and the ability to turn other assets into cash to pay off

liabilities and other current obligations. Liquidity is not only a measure of how much cash a

business has but also a measure of how easy it will be for the company to raise enough cash or

convert assets into cash. Assets like accounts receivable, trading securities, and inventory are

relatively easy for many companies to convert into cash in the short term. Thus, all of these assets

go into the liquidity calculation of a company. Current ratio is the most prevailing measure of

liquidity.

A. Current Ratio

=

The current ratio is a financial ratio that shows the proportion of current assets to current liabilities.

The current ratio is used as an indicator of a company's liquidity. In other words, a large amount

0.0225

-0.0594

0.0623

0.0295

-0.0800 -0.0600 -0.0400 -0.0200 0.0000 0.0200 0.0400 0.0600 0.0800

2015

2014

2015

2014

H i m a d r i

G H A I L

Return on Capital Employed


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of current assets in relationship to a small amount of current liabilities provides some assurance

that the obligations coming due will be paid. The following table shows the current ratios of

Himadri and GHAIL:

Himadri GHAIL2015 2014 2015 2014

Current Assets 41,608,891 6,181,182 432,130,850 503,780,024

Current Liabilities 77,681,469 53,670,983 554,345,794 388,426,676

Current Ratio 0.5356 0.1152 0.7795 1.2970

Current assets of Himadri in 2014 was low compared to its current assets. Hence, its current ratio

in that year was a mere 0.1152. In 2015, current assets increased significantly with slight increase

in current liabilities. Hence, current ratio increased. Yet the ratio is not up to the mark compared

to GHAIL. The following chart clearly depicts the differences:

3.2.3.3 Financial Position Ratios

These ratios help in the analysis of financial position of the company and in determining the

stability of the company and the ability of the company to repay its long-term debts.

A. Capital Gearing Ratio

0.5356

0.1152

0.7795

1.2970

0.0000 0.2000 0.4000 0.6000 0.8000 1.0000 1.2000 1.4000

2015

2014

2015

2014

H i m a d r i

G H A I L

Current Ratio


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=

ℎ ℎ ′

Gearing focuses on the capital structure of the business – that means the proportion of finance that

is provided by debt relative to the finance provided by equity (or shareholders). The gearing ratio

is also concerned with liquidity. However, it focuses on the long-term financial stability of a

business. Gearing (otherwise known as "leverage") measures the proportion of assets invested in

a business that are financed by long-term borrowing. In theory, the higher the level of borrowing

(gearing) the higher are the risks to a business, since the payment of interest and repayment of

debts are not "optional" in the same way as dividends. However, gearing can be a financially sound

part of a business's capital structure particularly if the business has strong, predictable cash flows.The following table shows the capital gearing ratios of the companies:

Himadri GHAIL

2015 2014 2015 2014

Total Long-term Debt 7,717,065 7,717,065 645,691,000 397,294,125

Share Holders ’ Fund 547,302,150 547,618,353 611,158,656 595,421,533

Capital Gearing Ratio 0.0141 0.0141 1.0565 0.6672

Himadri’s long term debt and share holders’ remained same in both the years. Long term debt is

much lower than share holders’ fund. Hence, capital gearing ratio is only 0.0141 in both the years.

Himadri can easily pay off its long term debt. Hence, immediate chances of bankruptcy is

negligible. Nevertheless, it is not leveraging enough. GHAIL on the other hand has optimum

gearing ratios. The following chart clearly depicts the differences:


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B. Debt Ratio

=

This ratio measures the extent of a company’s leverage. The debt ratio is defined as the ratio oftotal – long-term and short-term – debt to total assets, expressed as a decimal or percentage. It can

be interpreted as the proportio n of a company’s assets that are financed by debt. The following

table shows the debt ratios of Himadri and GHAIL:

Himadri GHAIL

2015 2014 2015 2014

Total Assets 632,700,684 609,006,401 1,811,195,450 1,381,142,334

Total Liabilities 85,398,534 61,388,048 1,200,036,794 785,720,801

Debt Ratio 0.1350 0.1008 0.6626 0.5689

Himadri finances an insignificant portion of its assets using debt. The debt ratios of Himadri are

around six times lower than those of GHAIL. Himadri is not maximizing on its opportunities to

take more loan. The following chart depicts the differences:

0.0141

0.0141

1.0565

0.6672

0.0000 0.2000 0.4000 0.6000 0.8000 1.0000 1.2000

2015

2014

2015

2014

H i m a d r i

G H A I L

Capital Gearing Ratio


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C. Interest Cover

= ( )

Interest cover or interest coverage ratio measures the ability of a company to pay the interest on

its outstanding debt. This measurement is used by creditors, lenders, and investors to determine

the risk of lending funds to a company. A high ratio indicates that a company can pay for its interest

expense several times over, while a low ratio is a strong indicator that a company may default on

its loan payments. The following table shows the interest coverage ratios of Himadri and GHAIL:

Himadri GHAIL

2015 2014 2015 2014

Operating Profit 12,491,951 -33,001,732 78,261,099 29,332,086

Interest Expenses 11,908,154 13,799,087 64,630,475 6,093,851

Interest Cover 1.0490 -2.3916 1.2109 4.8134

0.1350

0.1008

0.6626

0.5689

0.0000 0.1000 0.2000 0.3000 0.4000 0.5000 0.6000 0.7000

2015

2014

2015

2014

H i m a d r i

G H A I L

Debt Ratio


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Himadri is not generating enough profit to cover its interest in 2014. In 2015, the profit is more

than enough for that. GHAIL, on the other hand, makes sufficient profit to cover its interest both

the year. The following chart depicts the differences:

3.2.3.4 Efficiency Ratios

Efficiency ratios also called activity ratios measure how well companies utilize their assets to

generate income. Efficiency ratios often look at the time it takes companies to collect cash from

customer or the time it takes companies to convert inventory into cash — in other words, make

sales. These ratios are used by management to help improve the company as well as outside

investors and creditors looking at the operations of profitability of the company. Efficiency ratios

go hand in hand with profitability ratios. Most often when companies are efficient with their

resources, they become profitable. A key efficiency ratio is asset turnover ratio.

A. Asset Turnover Ratio

=

1.0490

-2.3916

1.2109

4.8134

-3.0000 -2.0000 -1.0000 0.0000 1.0000 2.0000 3.0000 4.0000 5.0000 6.0000

2015

2014

2015

2014

H i m a d r i

G H A I L

Interest Cover


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The asset turnover ratio is an efficiency ratio that measures a company's ability to generate sales

from its assets by comparing net sales with average total assets. In other words, this ratio shows

how efficiently a company can use its assets to generate sales. The total asset turnover ratio

calculates net sales as a percentage of assets to show how many sales are generated from each taka

of company assets. The following table shows the asset turnover ratios of Himadri and GHAIL:

Himadri GHAIL

2015 2014 2015 2014

Sales Revenue 80,250,145 33,108,874 256,095,176 184,546,936

Total Assets 632,700,684 609,006,401 1,811,195,450 1,381,142,334

Asset Turnover Ratio 0.1268 0.0544 0.1414 0.1336

Asset turnover ratios for Himadri and GHAIL are comparable. Himdri’s assets are generating

sufficient revenue. Himadri’s ratio increased from 2014 to 2015, while GHAIL’s remained similar.

The following chart depicts the differences:

0.1268

0.0544

0.1414

0.1336

0.0000 0.0200 0.0400 0.0600 0.0800 0.1000 0.1200 0.1400 0.1600

2015

2014

2015

2014

H i m a d r i

G H A I L

Asset Turnover Ratio


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4.0 Findings

A. Findings from Profitability Analysis

GHAIL has a quite healthy profitability. Himadry, on the other hand, made loss in 2014. It

recovered and made profit in 2015 although all the profitability ratios for Himadri may not seem

propitious. Based on these mere numbers, keeping Himadri in operation seems futile.

B. Findings from Liquidity Analysis

-2.0000

-1.5000

-1.0000

-0.5000

0.0000

0.5000

1.0000

2015 2014 2015 2014

Himadri GHAIL

Results from Profitability Analysis

Gross Profit Margin Net Profit Margin

Return on Assets Return on Capital Employed

0.5356

0.1152

0.7795

1.2970

0.0000

0.2000

0.4000

0.6000

0.8000

1.0000

1.2000

1.4000

2015 2014 2015 2014

Himadri GHAIL

Results from Current Ratios

Current Ratio


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GHAIL’s liquidity position is strong. Himadri’s liquidity position , on the other hand, is not up to

the mark. Its current assets do not match its current liabilities. GHAIL’s liquidity position is

healthy. Hence, the chart accentuates Himadri’s ill liquidi ty position.

C. Findings from Financial Position Analysis

Himadri has much higher level equity compared to its debt. Hence, it can make use of the

opportunity of taking more loans if it has access to better investment or growth opportunity.

Although its operating profit did not exceed its interest expense in 2014, in 2015 the operating profit was more than enough for that.

-3.0000

-2.0000

-1.0000

0.0000

1.0000

2.0000

3.0000

4.0000

5.0000

6.0000

2015 2014 2015 2014

Himadri GHAIL

Results from Financial Position Analysis

Capital Gearing Ratio Debt Ratio Interest Cover


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D. Findings from Efficiency Ratios

Himadri’s asset turnover ratio is comparable to that of GHAL, in 2015. Both firms have

experien ced an increase in efficiency from 2014 to 2015, although Himadri’s improvement

was steeper. This shows a beacon of light for Himadri.

0.1268

0.0544

0.14140.1336

0.0000

0.0200

0.0400

0.0600

0.0800

0.1000

0.1200

0.1400

0.1600

2015 2014 2015 2014

Himadri GHAIL

Findings from Efficiency Ratio

Asset Turnover Ratio


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5.0 Recommendations and Conclusion

The alternatives available for Ejab Group, Himadri’s mother entity , include:

i. Liquidating Himadri Limited and invest in other more profitable ventures

ii. Make use of its opportunity to take more loans against Himadri’s large asset base and invest

in Himadri

I would recommend the second one for three cogent reasons. First, Himadri, although not as

efficient as GHAIL, has enough efficiency. Moreover, its efficiency has grown from 2014 to 2015

significantly. This is apparent from its asset turnover ratio. Second, from 2014 to 2015,

profitability conditions got only healthier insinuating potential for more improvement. Third,

liquidating the business would not yield enough cash since most of Himadri’s assets include

property, plant and equipment and currently land price is on decline. Nevertheless, offering a

much specific and superior suggestion would demand a comprehensive study of the industry and

the environment which is beyond the scope of this study. Besides, deficiency of pertinent

information impinged on this study as well. Yet this study might aid further, more comprehensive

research.


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Appendix


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Reference

http://www.ejabgroup.com/

http://www.ejabgroup.com/himadri.php

http://www.goldenharvestbd.com/

http://www.goldenharvestbd.com/golden-harvest-agro-industries-ltd/

http://lankabd.com/

http://www.investopedia.com/
http://www.ejabgroup.com/http://www.ejabgroup.com/himadri.phphttp://www.goldenharvestbd.com/http://www.goldenharvestbd.com/golden-harvest-agro-industries-ltd/http://lankabd.com/http://www.investopedia.com/http://www.investopedia.com/http://lankabd.com/http://www.goldenharvestbd.com/golden-harvest-agro-industries-ltd/http://www.goldenharvestbd.com/http://www.ejabgroup.com/himadri.phphttp://www.ejabgroup.com/

Documents

Body - Internship Report on Ejab Group