1 | Page Executive Summary After growing at a robust twenty plus percentage in 2010 and 2011, Bangladesh Pharmaceutical Industry experienced a slower growth in 2012. The market grew by 11.9% in value terms to reach at Tk. 94 billion (IMS: Q4 2012 report). Despite a slower growth in the market, Beximco Pharma managed to achieve desired growth and successfully improve its market share. The country continued to maintain 6% plus GDP growth rate in 2012 as well. The alarming depreciation of Taka against US Dollar that continued throughout 2011 till January 2012 has finally been restrained. Thanks to higher inward remittances, lower payment for import settlements, and moderate growth in export. The local currency appreciated by around 2.5% against US Dollar in 2012. This was somewhat a relief to the predicted risk of significant reduction of gross margin that started brewing in 2011 in the wake of deteriorating value of local currency against US Dollar, high rate of domestic inflation and increase in the interest rates. The liquidity shortage that prevailed throughout 2011 also eased up to some extent in 2012. However, the political crisis that started by end of 2012 centering the upcoming election poses some degree of uncertainty in the overall economic environment of the country and is seen as an impediment to the growth of business. The first quarter of 2013 has already been affected for such instability in the political environment and continues to remain as a risk factor.
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Executive Summary
After growing at a robust twenty plus percentage in 2010 and 2011, Bangladesh Pharmaceutical
Industry experienced a slower growth in 2012. The market grew by 11.9% in value terms to
reach at Tk. 94 billion (IMS: Q4 2012 report). Despite a slower growth in the market, Beximco
Pharma managed to achieve desired growth and successfully improve its market share. The
country continued to maintain 6% plus GDP growth rate in 2012 as well. The alarming
depreciation of Taka against US Dollar that continued throughout 2011 till January 2012 has
finally been restrained. Thanks to higher inward remittances, lower payment for import
settlements, and moderate growth in export. The local currency appreciated by around 2.5%
against US Dollar in 2012. This was somewhat a relief to the predicted risk of significant
reduction of gross margin that started brewing in 2011 in the wake of deteriorating value of local
currency against US Dollar, high rate of domestic inflation and increase in the interest rates. The
liquidity shortage that prevailed throughout 2011 also eased up to some extent in 2012.
However, the political crisis that started by end of 2012 centering the upcoming election poses
some degree of uncertainty in the overall economic environment of the country and is seen as an
impediment to the growth of business. The first quarter of 2013 has already been affected for
such instability in the political environment and continues to remain as a risk factor.
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Introduction
Origin of the report
East West University promotes meaningfully blends of eastern culture and western thoughts and
innovations. To do this EWU provides many subjects like BUS, MKT and FIN etc. “Managerial
finance” FIN-201 is one of the courses for a student doing in BBA. Precisely it teaches how can
we analyze a financial statement and draw a recommendation for improve it.
To practically experience the implementation of all of those issues we have learned through the
course FIN-201 that is conduct by Farzana Akther, our respected course teacher of “Managerial
finance” has given us this assignment on “BEXIMCO Pharmaceutical Ltd” and manufacturing
company’s financial ratio analysis.
Background of the study
The report is done as a part of the research of the course FIN-201.The report focuses on
BEXIMCO Pharmaceutical and manufacturing company’s financial ratio analysis. The research
paper is prepared for Farzana Akther, Lecturer of business Administration Dept. at East West
University. She authorized the task of writing this report to a group of five members. This
research is prepared during the semester Summer- 2013.
A finance student must know about the analysis of a financial statement. As a finance student we
try our best to analyze the financial statement of BEXIMCO Pharmaceutical.
Objective of the study
The main objective of this assignment is to practice the real life financial statements analysis. It
will help us to know how we can analyze a financial statement and how we can recommend for
improvement and so on.
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Methodology:
At first we got the report design and structure from our academic supervisor and moved for the
next steps.
To prepare this report we had to collect data from both primary and secondary sources-
Primary Data:
Primarily we collected data from annual report of the company. We also collect the information
by Discussing with our group members and also from our textbook.
Secondary Data:
We also collect data from secondary source. As
Different Journals
Through web searching
Annual report
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History of the Beximco Pharmaceutical Ltd
Beximco Pharmaceuticals Ltd. is a leading edge pharmaceutical company based in Dhaka,
Bangladesh and is acclaimed for its outstanding product quality, world-class manufacturing
facilities, product development capabilities and outstanding professional services. Beximco
Pharma is the pioneer in pharmaceutical export from Bangladesh and has received National
Export Trophy (Gold), the highest national accolade for export, for record three times.
Year of Establishment: 1976
Commercial Production: 1980
Status: Public Limited Company
Business Lines: Manufacturing and marketing of Pharmaceutical Finished Formulation
Products, Large Volume Parenterals, Small Volume Parenterals, Ophthalmic Preparations,
Nebulizer Solutions and Active Pharmaceutical Ingredients (APIs)
In 2012 BEXIMCO Pharmaceutical LTD’s Total asset turnover is 0.377763 times. Over the year
FAT is increasing as in 2008 it was 0.270598 times and 2012 it was 0.377763 times. So the efficiency is
good. On the other hand IBN Sina Pharma LTD’s TAT is 1.916332 times. Over the year TAT is
decreasing as in 2008 it was 20.4852 times and 2012 it was 1.916332 times. So the efficiency is not good.
Debt Management ratio of BEXIMCO Pharmaceutical Compare to IBN Sina Pharma. Ltd.
(2008-2012)
Debt ratio:
Debt Ratio= Total DebtTotal Assets
BEXIMCO Pharmaceutical
Debt Management ratio 2008 2009 2010 2011 2012
2 Debt to total asset ratio 29% 45% 25% 26% 25%
IBN Sina Pharma. Ltd.
Debt Management ratio 2008 2009 2010 2011 20122 Debt to total asset ratio 51% 64% 57% 37% 37%
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From 2008 to 2012 Beximco Pharmaceutical LTD. has lower debt ratio compare to IBN Sina
Pharma LTD. So over the year Beximco Pharmaceutical LTD. has lower leverage and this firm
is les riskier compare to IBN Sina Pharma LTD.
Time interest earn Earned ratio:
Time‐ Interest ‐ Earned (T ‐ I ‐ E)Ratio=Earning Before Inetest∧TaxInterest Charges
BEXIMCO Pharmaceutical
Debt Management ratio 2008 2009 2010 2011 2012
1 Time Interest Earned Ratio (TIME) 3.420913 3.503029 2.470286 3.459522 4.000712
IBN Sina Pharma. Ltd.
Debt Management ratio 2008 2009 2010 2011 20121 Time Interest Earned Ratio (TIME) 11.09802 10.89417 8.901569 11.45903 18.7439
From 2008 to 2012 the TIE ratio of Beximco Pharmaceutical LTD. is approximately stable. In
2012 the firm has 4.000712 times TIE ratio. That means the firm had 4.000712 times EBIT to
cover 1 unit interest. On the other hand IBN SinaPharma LTD. had 18.7439 times EBIT to cover
1 unit interest. Over the years (2008 to 2012) IBN Sina Pharma LTD. had higher TIE ratio. That
means IBN Sina Pharma LTD. had lower operating risk than Beximco Pharmaceutical LTD.
Market ratio of BEXIMCO Pharmaceutical Compare to IBN Sina Pharma. Ltd. (2008-
2012)
Price to Earnings ratio:
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Price ¿ Earning Ratio= Market Price Per ShareEPS
BEXIMCO Pharmaceutical
Debt Management ratio 2008 2009 2010 2011 2012
1 P/E ratio 46.45
44.51 32.32
23.82
12.91
IBN Sina Pharma. Ltd.
Debt Management ratio 2008 2009 2010 2011 2012
1 P/E ratio 20.70
28.38 29.05
24.78
20.39
In 2012 Beximco Pharmaceutical LTD. had 12.91 P/E ratio and the market price per share was 55.9 tk.
That means share holders were willing to pay 55.9 tk to earn 12.91 tk and to get this investment they
need 12.91 years time. On the other hand the P/E ratio of IBN Sina Pharma was 20.39 and market price
per share was 85.49. that means share holder were willing to pay 85.49 tk to get 20.39 tk profit. And it
will take 20.39 years time to get the investment back. Over the year the P/E ratio of Beximco
Pharmaceutical LTD. was decreasing. And this is lower than IBN Sina Pharma LTD. so the firm had lower
risk, lower growth and lower in future return.
Trend Analysis
Return on equity:
BEXIMCO Pharmaceutical
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Profitability Ratios 2008 2009 2010 2011 2012
1 ROE 5.22% 5.74% 6.58% 7.00% 7.17%
IBN Sina Pharma. Ltd.
Profitability Ratios 2008 2009 2010 2011 2012
1 ROE 22.94% 22.86% 22.35% 8.95% 10.11%
2008 2009 2010 2011 20120
0.05
0.1
0.15
0.2
0.25
BEXIMCOIBN SINA
In 2012 BEXIMCO Pharmaceutical LTD is generating 7.17% net income by its total equity.
Over the year the ROE is increasing as in 2008 it was 5.22% and in 2012 it was 7.17%. So the
profitability is better. On the other hand IBN Sina Pharma LTD. is generating 10.11% net
income by its total equity. Over the year the ROE is increasing as in 2008 it was 22.97% and in
2012 it was 10.11%. So the profitability is not better.
NET INCOMES
Time BEXIMCO IBN SINA
2008 545341273 66826417
2009 624740307 54916571
2010 1051648808 60070895
2011 1198525342 49233664
2012 1319389328 43285209
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2008 2009 2010 2011 20120
200000000
400000000
600000000
800000000
1000000000
1200000000
1400000000
BEXIMCOIBN SINA
In this graph we can see Baximco Pharmaceutical LTD. had a great level of efficiency to to
generate its net income by using its assets, debt, and equity. But IBN Sina Pharma LTD. cannot
generate its net income as Baximco Pharmaceutical LTD. can. So the pharm is in much more
better position than IBN Sina Pharma LTD.
Total Asset:
Time BEXIMCO IBN SINA2008 14819665441 10485770232009 19891933422 9789024272010 21372399509 6256135272011 23033340533 6040933942012 24589810592 513654097
2008 2009 2010 2011 20120
5000000000
10000000000
15000000000
20000000000
25000000000
30000000000
BEXIMCOIBN SINA
In 2008 Beximco Pharmaceutical LTD. had more current and total assets than IBN Sina Pharma
LTD. This graph shows over the time the firm increasing its total assets on the other hand IBN
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Sina Pharma LTD. had no efficiency to increase its total assets. So Beximco Pharmaceutical
LTD. is in batter position.
Time interest earn Earned ratio:
BEXIMCO Pharmaceutical
Debt Management ratio 2008 2009 2010 2011 2012
1 Time Interest Earned Ratio (TIME) 3.420913 3.503029 2.470286 3.459522 4.000712
IBN Sina Pharma. Ltd.
Debt Management ratio 2008 2009 2010 2011 20121 Time Interest Earned Ratio (TIME) 11.09802 10.89417 8.901569 11.45903 18.7439
2008 2009 2010 2011 20120
5
10
15
20
25
IBN SINABEXIMCO
From 2008 to 2012 the TIE ratio of Beximco Pharmaceutical LTD. is approximately stable. In
2012 the firm has 4.000712 times TIE ratio. That means the firm had 4.000712 times EBIT to
cover 1 unit interest. On the other hand IBN SinaPharma LTD. had 18.7439 times EBIT to cover
1 unit interest. Over the years (2008 to 2012) IBN Sina Pharma LTD. had higher TIE ratio. That
means IBN Sina Pharma LTD. had lower operating risk than Beximco Pharmaceutical LTD.
Debt Ratio
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BEXIMCO Pharmaceutical
Debt Management ratio 2008 2009 2010 2011 2012
2 Debt to total asset ratio 29% 45% 25% 26% 25%
IBN Sina Pharma. Ltd.Debt Management ratio 2008 2009 2010 2011 2012
2 Debt to total asset ratio 51% 64% 57% 37% 37%
1 2 3 4 50
0.2
0.4
0.6
0.8
1
1.2
IBN SINABEXIMCO
From 2008 to 2012 Beximco Pharmaceutical LTD. has lower debt ratio compare to IBN Sina Pharma LTD. So over the year Beximco Pharmaceutical LTD. has lower leverage and this firm is les riskier compare to IBN Sina Pharma LTD.
From the point of total equity the firm is much better position than IBN Sina Pharma LTD. and gradually the firm s increasing its total equity. On the other hand IBN Sina Pharma LTD cannot
handle its equity properly. So this trend shows the equity of IBN Sina Pharma is decreasing.
DuPont Analysis
BEXIMCO Pharmaceutical LTD.
YearROE Total Equity NPM TAT EM
2010 6.58% 15974086451 16.20% 30.4% 134%
2011 7.00% 17128128177 15.19% 34.3% 134%
2012 7.17% 18408161859 14.20% 37.8% 134%
Over the year the ROE is increasing because total asset turnover is increasing. So we can interpret the the performance of the firm is good.
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IBN Sina Pharma. Ltd.
Year ROE Total Equity NPM TAT EM
2010 22.35% 268731129 5.64% 170.3% 233%
2011 8.95% 215410234 3.13% 179.3% 160%
2012 10.11% 188676570 3.33% 191.6% 171%
In 2010, 2011, 2012 ROE ware respectively 22.35%, 8.95% and 10.11% so ROE was decreasing and the reason ware net profit margin, total asset turnover and equity multipliers. From the basis of equity multipliers we can see that the firm was riskier and net profit margin and total asset turnover was decreasing. So we can interpret that the performance of this firm was not so good.
Findings
Last few years the world economy was in recession situation. That’s why it is hard to draw a financial situation of a company based on last 5 years information. According to last 5 years data the liquidity ratio of Beximco Pharmaceutical was much better than IBN Sina Pharma LTD.
Pre-tax profit of Beximco Pharmaceutical increased by 13.8% to reach at Tk. 1,909.8 million as against Tk. 1,677.8 million. In 2012 the Company earned a Post -tax profit of Tk. 1,319.4 million which is an appreciable 10.1% higher than that of the previous year. The Company managed to maintain its gross profit rate at 47.3% (2011: 48.0%), despite high rate of domestic inflation. Improved product mix and effective cost-management and profit optimization strategies significantly contributed in minimizing the negative impact on gross margin. On the other hand IBN Sina Pharmaceutical Industry Ltd. has been able to maintain the continual sales growth and achieve 0.41% NPM, 6.37% ROA and 7.17% ROE which is compare low in this industry. That means Beximco Pharmaceutical LTD. was very much efficient in generating their profit.
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Beximco Pharmaceutical LTD. had a higher rate of assets equity and stable risk and that’s why because they can manage their inventories, equities, account payable and account receivable in a significant level. And they can handle the firm’s assets in the recessionary period. In order to control all matters involving risks, the Company has a vigorous risk management process. But IBN Sina Pharma LTD. cannot manage their assets in the recessionary period because their credit policy was risky.
In the overall analysis of those two firms we can conclude that, Beximco Pharmaceutical LTD. had high level of assets, equity, sales ratio, and stable risk in this industry. But IBN Sina Pharma LTD had high risk policy, low assets, low equity. And those are the reason for the better performance of Beximco Pharmaceutical LTD. in this industry.
Bibliography
1. leading edge pharmaceutical company, based in Dhaka, Bangladesh.
2013.leading edge pharmaceutical company, based in Dhaka, Bangladesh.
[ONLINE] Available at: http://www.beximco-pharma.com/. [Accessed 21 July
2013].
2. THE IBN SINA. 2013. THE IBN SINA. [ONLINE] Available
at:http://www.ibnsinapharma.com/. [Accessed 23 July 2013].
3. BEXIMCO PHARMACEUTICALS LIMITED 2008 to 2012. Annual Report 2008 to
2012. Bangladesh:BEXIMCO PHARMACEUTICALS LIMITED
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4. The IBN SINA Pharmaceutical LTD. 2008 to 2012. Annual Report 2008 to
2012. Bangladesh:The IBN SINA Pharmaceutical LTD. .
Appendix
Beximco Pharmaceutical Ltd
Balance Sheet of Beximco Pharma Ltd. Amount in Taka
2008 2009 2010 2011 2012
Assets Non current asset 11957773787 12975195529 15180731678 15884877780 16392388639 Property, Plant and Equipment- Carrying Value 11921072697 12966587178 15123306298 15745492625 16201858216 Intangible Assets 5726525 51126854 135933879 187079147 Investment in Shares 36701090 2881826 6298526 3451276 3451276 Current Assets 2861891654 6916737893 6191667831 7148462753 8197421953
Administrative Expenses (153464243) (215192547) (233413980) (275201846) (332225347)Selling, Marketing and Distribution Expenses (855036787) (1085573331)
(1304012927)
(1522851278) (1849296520)
Profit from Operations 998794848 1001282411 1635780192 1988479698 2207879560 Other Income 686510 198986379 456011134 340907774 442847713 Finance Cost (249654298) (289427992) (662182384) (567645757) (645406575)Profit before Contribution to W P P & Welfare Funds 749827060 910840798 1429608942 1761741715 2005320698 Contribution to W P P & Welfare Funds (35706050) (43373371) (68076616) (83892463) (95491462) Profit Before Tax 714121010 867467427 1361532326 1677849252 1909829236
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Income Tax Expenses (168779737) (242727120) (309883518) (479323910) (590439908)Current Tax (173720430) (71085835) (207549905) (445712907)Deferred Tax 4940693 (242727120) (238797683) (271774005) (144727001)Profit after Tax for the Year 545341273 624740307 1051648808 1198525342 1319389328 Other Comprehensive Income Total Comprehensive Income for the Year 545341273 624740307 1051648808 1198525342 1319389328 Earnings Per Share (EPS) / Adjusted EPS 3.61 3.50 4.18 3.93 4.33 Number of Shares used to compute EPS 151149296 151149296 203420202 304639050 304639050 Market Price per Share 167.70 155.80 135.10 93.60 55.90