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Introduction

Bangladesh is an emerging market. The economy is growing gradually. Though RMG,


Agricultural, Pharmaceuticals etc. sectors are considered as major part of business and economy,
but Ceramics Industries are also an old and important sector.
Ceramics has a high demand in the world. Bangladesh apparently has the perfect geographical
position, supply of raw materials and labor available to meet this demand. Ceramics industry of
Bangladesh produces wall and floor tiles, sanitary ware, ceramics plate and cup, tableware etc.
Ceramic industry of Bangladesh is a booming sector and the great potential of both domestic and
foreign market.
We have decided to select ceramics industry of Bangladesh for our topic. We will be comparing
and analyzing the performance of the two major ceramic companies. RAK Ceramics Ltd and
SHINEPUKUR Ceramics Ltd. We decided to select this industry because of its huge
contribution to improve the economic condition of our country.

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Background of the companies


RAK Ceramics: RAK Ceramics (Bangladesh) Ltd incorporated in Bangladesh on 26 November,
1998 as a private company limited by a share under the company act 1994. It is engaged in
manufacturing and marketing of ceramic tiles, bathroom sets and all types of sanitary ware. It
has started its commercial production 0n 12 November, 20000. RAK Ceramics Ltd, 90% held by
RAK Ceramics PSC and its nominees, a company incorporated under the laws of UAE and
remaining 10% owned by local investor Mr. S.A.K. Ekramuzzaman. With an annual turnover of
over BDT 3248 million, within the short span of 11 years RAK has firmly established itself as
one of the leading manufacturer of high quality ceramic wall floor tiles, and sanitary wares
products in Bangladesh. The core business of RAK Ceramics Ltd is to manufacture and sell of
tiles and sanitary wares. The company has over 1000 models active in the ceramic and porcelain
tile business and regularly adds several new designs to the product portfolio. The company
manufactures tiles in a very wide range of tiles in the size from 20 cm x 30 cm up to 60 cm x 60
cm in Bangladesh location. The company has over 40 models an exclusive range of sanitary ware
to offer with a very wide choice. Most of production is consumed in local market and balance
gets exported to UAE. RAK ceramics Bangladesh Ltd is an ISO certified organization.
SHINEPUKUR Ceramics: SCL is a member of BEXIMCO group which is the largest private
business conglomerate in Bangladesh. SHINEPUKUR ceramics has been registered in
Bangladesh in 1997 and plants were commissioned in 1998. Total investment in the company is
US$ 35 million. The company has already made additional investment of US$ 10 million to
expand its Bone china unit. SHINEPUKUR has well control laboratory facilities, and has its
disposal, own captive gas-based power generation capability, own water supply, and medical and
sanitary facilities. The company was certified ISO in Aug 2001. SCL produces variety and a
wide range of Bone china and porcelain tableware for retail as well as hotel, and Ivory china for
retail house ware. Complementing its superb range of bone china, SHINEPUKUR also offers
porcelain, ivory china, high alumina table ware for all different market segments and they
produce dinner to tea plates, soup tureens to soup spoons, retail tabletop to industrial. They
export their products in Australia, Argentina, Canada, Denmark, France, India and many other
countries.

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Objectives of the Study


BROAD:
The main objective of this study was to identify and assess the present financial position of two
Ceramics Industries Limited. The study was also attempted to evaluate the prospects of financial
growth market growth of the organization. The study broadly aimed at analyzing the feasibility
of the expansion project of Comparative Performance Analysis between these two Ceramics
Industries Limited.
SPECIFIC:

(a)
(b)
(c)
(d)
(e)
(f)
(g)

To analyze the overall financial position of Ceramics industries Limited.


To comparing the ceramics industries limited.
To assess the quality of the brand from the viewpoint of a manager.
To evaluate the current financial position of the companies.
To find out the current financial position of Ceramics Limited.
To prepare a target based on historical data.
To analyze the forecasted element for future perspective.

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Methodology
Project design:
The nature of the study is evaluative one and it described different ratios of Ceramics Limited in
terms of financial position. This project report typically focused on ratio analysis but there is
some descriptive information too. It focused on two ceramics industries limiteds financial
position, performance, current position etc.

Data sources:
This report is prepared mainly on the extensive use of secondary data available in annual reports.
Based on the data from the annual reports the overall paper is prepared. The overall conceptual
and theoretical framework has been explained as well as the how the data are analyzed is
explained below:

o The Primary sources are absent in this case.


o The Secondary Sources of data and the information are used to prepare this
paper work.

Data collection:
o Annual Report of Shinepukur & RAK Ceramics Limited.
o Website
o Various books, articles and compilations
o Journals

Data analysis:
Financial Analysis based on the performance comparison has been done with ratio formulas, and
used to compare the performances of ceramics industries. Ratio analysis is presented in a
standard manner so that the calculations and interpretations might clear to all. The decision
criterion is based on the comparison of each ceramics performance with the Industry Average.
The industry average is calculated on the basis of the average of average of the banks that are
collected as sample for the comparison of performance between five ceramics limited.

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Limitation of Study
Shortage of time period:
Time constraint would be the major factor for the study. We have completed this report writing
within a shorter period of time. So the time constraint of the study hindering the course of vast
area and time for preparing a report within the mentioned period is really difficult.
Lack of sufficient well informed websites:
There are some lacks of information in financial statement (balance sheet and income statement).
So, we have faced many difficulties to collect information.
Organization do not want to provide all information needed to conduct study.
Small knowledge.
In many cases, updated information is not available.
In some cases, respondents do not provide the required information.

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Financial Statement Analysis: (Ratios)


Shinepukur Ceramics Limited
Balance Sheet
as at 31 December 2012-14

Amount in Taka (mn)

31-Dec-14
ASSETS
Non-Current Assets
Property, Plant and Equipment - Carrying Value
Investment in Shares
Capital Work in Progress
Current Assets
Inventories
Accounts & Other Receivables
Advances, Deposits & Prepayments
Cash and Cash Equivalents
Total Assets
EQUITY AND LIABILITIES
Shareholders' Equity
Issued Share Capital
Revaluation Surplus on Property, Plant and Equipment
Fair Value Loss on Investment in Shares
Retained Earnings
Non-Current Liabilities
Long Term Loan (Secured)
Long Term Loan (Unecured)
Gratuity Payable
Deffered Tax Liability
Current Liabilities
Short Term Loan from Banks (Secured)
Long Term Loan-Current Maturity (Secured)
Creditors, Accruals and Other Payables
Total Equity and Liabilities

31-Dec-13

31-Dec-12

5,644.821
4,204.123
78.983
1,361.715
1,044.626
671.351
157.873
193.770
21.631
6,689.447

5,163.869
4,284.727
61.222
817.919
1,710.386
912.642
674.987
108.267
14.488
6,874.255

5,323.600
4,384.003
121.705
817.892
1,796.413
845.059
853.413
81.930
16.010
7,120.013

4,264.594
1,469.661
2,966.690
(85.988)
(85.768)
627.018

4,487.867
1,469.661
2,966.690
(103.749)
(155.265)
629.398

4,544.462
1,277.966
2,966.690
(58.955)
(358.761)
803.484

376.276

321.383

296.189

92.418
158.324
1,797.835
1,065.658
183.015
549.162
6,689.447

301.584
6.430
1,756.990
964.471
322.693
469.825
6,874.255

498.838
8.457
1,772.067
1,183.796
143.242
445.029
7,120.013

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Shinepukur Ceramics Limited


Income Statement
for the year ended 31 December 2012-14

Amount in Taka (mn)

31-Dec-14

31-Dec-13

31-Dec-12

1,677.658
(1,253.444)
424.214
22.627
(165.076)
(73.013)
(92.063)
281.764
(258.876)
22.888
(1.090)
21.798
(24.134)
(2.336)

1,692.445
(1,241.105)
451.340
12.241
(111.275)
(58.763)
(52.512)
352.306
(6.192)
(393.026)
(46.911)
(46.911)
(10.717)
(57.629)

1,942.351
(1,268.313)
674.038
(105.872)
(54.107)
(51.765)
568.165
(19.649)
(364.625)
183.890
(8.756)
175.133
(84.849)
90.285

17.761

44.794

(45.583)

Total Comprehensive Profit/(Loss) for the Year

15.425

(102.422)

44.702

EPS

(0.020)

(0.390)

0.610

Sales (Revenue)
COGS
Gross Profit
Other Income
Operating Expenses
Administrative Expenses
Selling and Distribution Expenses
Profit from Operations
Loss on Sale of Shares
Finance Cost
Profit/(Loss) Before Contribution to WPPF
Contribution WPPF
Net Profit/(Loss) Before Tax
Income Tax Expense
Net Loss After Tax for the Year
Other Comprehensive Income:
Fair Value Gain/(Loss) on Investment in Shares

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RAK Ceramics (Bd) Limited


Balance Sheet
as at 31 December 2012-14

Amount in Taka (mn)

31-Dec-14

31-Dec-13

31-Dec-12

ASSETS
Non-Current Assets
Property, Plant and Equipment
Intangible Assets
Capital work in progress
Investment in Subsidiaries
Investment in associates
Trade and other receivables
Loan to subsidiaries and associates
Current Assets
Inventories
Trade and other receivables
Loan Associates
Advances, deposits and prepayments
Advance Income Tax
Cash and Cash Equivalent

3,180.814
1,798.341
4.815
289.116
191.600
191.600
518.913
187.146
6,556.034
361.914
713.050
40.661
1,912.281
1,774.687
1,394.695

3,438.921
1,899.003
1.607
35.091
633.870
266.350
43.400
559.597
5,827.334
1,858.379
720.608
35.606
188.900
1,586.060
1,437.778

3,494.457
2,095.514
3.192
30.955
639.990
229.600
595.204
4,791.945
1,612.374
749.283
4.795
171.717
1,272.294
981.480

Total Assets

9,736.848

9,266.255

8,286.402

Equity
Share Capital
Share Premium
Retained Earnings
Non-Current Liabilities
Current Liabilities
Short term borrowing
Employers benefit payable
Trade and other payables
Accrued expenses
Provision for royalty and technical know-how fee
Provision for income tax

6,695.180
3,368.506
1,473.647
1,853.026
41.564
3,000.104
323.755
70.668
370.177
172.991
1,758.939

6,565.368
3,062.278
1,473.647
2,029.441
56.957
2,643.929
255.783
12.843
245.573
145.113
225.676
1,758.939

6,114.564
2,783.889
1,473.647
1,857.027
84.081
2,187.758
212.530
10.959
193.897
133.298
219.094
1,417.977

Total Equity and Liabilities

9,736.848

9,266.255

8,286.402

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RAK Ceramics (Bd) Limited


Income Statement
for the year ended 31 December 2012-14
Sales (Revenue)
COGS
Gross Profit
Other Income
Operating Expenses
Administrative Expenses
Selling and Distribution Expenses
Profit from Operations
Net Finance Income
Profit/(Loss) Before Contribution to WPPF
Contribution WPPF
Net Profit/(Loss) Before Tax
Income Tax Expense
Net Loss After Tax for the Year
Other Comprehensive Income:
Total Comprehensive Profit/(Loss) for the Year
EPS

Amount in Taka (mn)

31-Dec-14

31-Dec-13

31-Dec-12

5,009.387
(3,161.225)
1,848.162
44.076
(1,068.625)
(403.879)
(664.746)
823.613
197.475
1,021.088
(48.623)
972.465
(383.311)
589.154
-

4,687.262
(2,961.999)
1,725.263
38.414
(722.651)
(235.662)
(486.989)
1,041.026
200.312
1,241.338
(59.111)
1,182.227
(313.839)
868.388
-

4,507.821
(2,851.121)
1,656.700
29.739
(644.552)
(244.352)
(400.200)
1,041.887
165.625
1,207.512
(57.500)
1,150.012
(319.482)
830.530

589.154

868.388

830.530

1.750

2.580

2.710

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Shinepukur Ceramics Limited (SCL)


(Ratio Analysis)
Yr. 2014
0.58

Yr. 2013
0.97

Yr.2012
1.01

2. Quick Ratio (Times)

0.21

0.45

0.54

3. Inventory Turnover Ratio


(Times)

1.87

1.36

1.50

4. DSO (Days)

33.88

143.58

158.17

5. Fixed Asset Turnover/FAT


Ratio (Times)

0.30

0.33

0.36

6. Total Asset Turnover/TAT


Ratio (Times)

0.25

0.25

0.27

7. Debt Ratio (%)

36.25

34.71

36.17

8. Times-Interest-Earned/TIE
Ratio (Times)

0.90

0.00

2.06

9. Net Profit Margin (%)

0.92

6.05*

2.30

1. Current Ratio (Times)

Comments
SCLs Current Liabilities are growing
and Current Assets are declining. It
means the firms capability to pay
their current liabilities are not so well
in terms of their current assets. We
should be more focus on proper
current assets and current liabilities
management.
Firms liquidity situation of assets is
very poor gradually to cover its
current liabilities, which is a bad sign
for future growth.
Though the firms inventory turnover
ratio looks good on 2014, but overall
condition is not so well. As a
manager, we should focus more to
utilize inventory in a proper way.
SCLs average collection period of
credit sales amount is too good on
2014. Though it seems very slow in
2012 and 2013.
SCL cannot cover the value of its fixed
assets by its sales with an efficient
way. As a manager, we should be
more concern to generate more
revenue and reduce the costs.
SCL is not well-managed to cover the
value of its total assets by its sales
with an efficient way. As a manager,
we should be more concern to
generate more revenue and reduce
the costs.
The firms liabilities are not well paid
by the total assets. It refers the
amount of total assets should be
increased in terms of total liabilities
to safeguard from any bad financial
situation.
SCLs payment of interests is not very
well managed by EBIT. It should be
more efficient to pay interest to avoid
bankruptcy.
The margin is showing more volatile.
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10. ROE (%)

1.05

6.97*

3.50

11. ROA (%)

0.23

1.49*

0.63

It may be done cause of inefficient


cost
management
of
the
organization.
It refers the organizations equity
management condition in terms of its
net income. The higher and
increasing ROE refers the strength of
the firms equity and debt
management. Here the situation is
showing volatile, which is a bad signal
for management.
ROA reflects the SCLs net income
cannot cover up the value of the
assets with an efficient manner. It
may create cause of the poor asset
and cost management of the
organization.
*Net Loss

RAK Ceramics (Bd) Limited


(Ratio Analysis)
Yr. 2014
2.19

Yr. 2013
2.20

Yr.2012
2.19

2. Quick Ratio (Times)

2.06

1.50

1.45

3. Inventory Turnover Ratio


(Times)

8.73

1.59

1.77

4. DSO (Days)

51.24

55.35

59.84

5. Fixed Asset Turnover/FAT


Ratio (Times)

1.57

1.36

1.29

1. Current Ratio (Times)

Comments
It reflects the RAKs strength of
liquidity of current assets is almost
double than its liability. So the firm
can handle the debt with a wellmanaged way.
As we know the inventory is less
liquid. So, after deduction of
inventory from the current assets we
can find the RAKs actual liquidity of
current assets is strong and increasing
as a good manner.
Though the inventory turnover shows
an unexpected growth in 2014, but
the actual scenario seems like volatile.
It means the inventory has been
utilized in a maximum way on 2014 to
meet the cost of its production.
Here, we can see the RAK usually
draw its receivable from the market
within 50-60 days. Though it is
consistent, but as a manager we
should try to minimize the period.
To generate sales, RAK is utilizing the
plants and equipments in an efficient
way. Its performance is increasing
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6. Total Asset Turnover/TAT


Ratio (Times)

0.51

0.51

0.54

7. Debt Ratio (%)

31.24

29.15

27.42

8. Times-Interest-Earned/TIE
Ratio (Times)

21.00

21.00

21.00

9. Net Profit Margin (%)

11.76

18.53

18.42

10. ROE (%)

8.80

13.23

13.58

11. ROA (%)

6.05

9.37

10.02

Though RAK is utilizing the fixed


assets in sales related activities in a
very efficient way, but the efficiency
of using total assets are not very
satisfactory.
The total assets of RAK is not
sufficient to cover-up the total
liabilities. It is not a good sign and the
situation is growing gradually.
RAK is paying the interest of debt in a
consistent way. Besides, it has
sufficient fund to pay interests.
Though the margin was little upward
moving on 2013, but it fell
tremendously on 2014. It may be
occurred cause of proper cost
management, managerial issues or,
any other factors.
The liquidity position is declining
gradually. It creates impact on the
ROE. It may cause others uninterested
to invest.
RAKs ROA is rapidly moving
downward. That is not a good sign. It
shows the negative capability of firm
to utilize their assets for sales.

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Comparative Analysis: (Ratios)

Ratio Analysis

SCL
2014

2013

RAK
2012

2014

2013

2012

1. Current Ratio (Times)


0.58
0.97
1.01
2.19
2.20
2.19
Comments: The capability of paying current liabilities in terms of current assets is very
satisfactory of RAK than Shinepukur. The current liabilities are well managed by the current
assets of RAK. Shinepukur should provide concern on proper liabilities management.
2. Quick Ratio (Times)
0.21
0.45
0.54
2.06
1.50
1.45
Comments: The capability of liquidity is too high for RAK than SCL. So, RAK can get the
advantage to become risk free. But, SCL can face problem of being bankrupt or, any other debt
related issues.
3. Inventory Turnover Ratio (Times)
1.87
1.36
1.50
8.73
1.59
1.77
Comments: RAK is highly efficient to utilize the inventory towards the production. It is a good
factor to minimize cost for any organization. So, RAK will get more competitive advantage than
Shinepukur.
4. DSO (Days)
33.88 143.58 158.17 51.24 55.35 59.84
Comments: Though Shinepukurs previous years period of collection of receivables from the
market is too high than RAK but on current it has been minimized. So, it is showing a good sign.
On other hand, RAKs collection period is consistent within the range of 50-60 days. It shows
also an efficient sign of collection.
5. Fixed Asset Turnover/FAT Ratio (Times)
0.30
0.33
0.36
1.57
1.36
1.29
Comments: Fixed assets are utilized in a very well manner by RAK than Shinepukur. RAKs
efficiency is almost 5 times higher than SCL.
6. Total Asset Turnover/TAT Ratio (Times)
0.25
0.25
0.27
0.51
0.51
0.54
Comments: RAK is also able to utilize its total assets for selling good to gain profit with a
sufficient way than SCL. The utilization rate is almost double than SCL.
7. Debt Ratio (%)
36.25 34.71 36.17 31.24 29.15 27.42
Comments: In consideration of total liabilities and assets, both the firms are walking almost the
same path. They should be more concern for debt management to rescue their goodwill and
avoid bankruptcy.
8. Times-Interest-Earned/TIE Ratio (Times)
0.90
0.00
2.06
21.00 21.00 21.00
Comments: The RAKs interest-payments capability shows a consistency. They are highly
capable to pay interest by its net operating income. Though SCLs scenario is volatile and not
very well managed.
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9. Net Profit Margin (%)


0.92
6.05
2.30
11.76 18.53 18.42
Comments: Shinepukur should focus more on cost and debt management to maximize profit
margin. On other side, RAK should also re-focus on the same area. Though the scenario is good
for RAK than Shinepukur, but the actual condition is in gradually declining movement.
10. ROE (%)
1.05
6.97
3.50
8.80 13.23 13.58
Comments: The total equities of common stockholders are well-managed through the net
income by RAK. It is supportive to gain the royalty and faith of shareholders to grow future
investment and profitability. Though the current situation is little low of RAK, but it can be
managed as they have capabilities. But, the scenario for SCL is totally reverse.
11. ROA (%)
0.23
1.49
0.63
6.05
9.37 10.02
Comments: RAK has more efficiency to utilize the assets than Shinepukur to maximize net
income. That is reflected on the ROA. though the condition of ROA is declining gradually year
after year. So both the companies need to focus on that.

Overall Comparison
Shinepukur and RAK, both are the renowned name for the Bangladeshi market. The scenario of
financial background looks totally different from each other. Where RAKs strength is showing,
on other side Shinepukurs weakness is representing also in statements. RAK is strong for its
cost, assets, inventory, debt, and equity management. But, Shinepukur should work hard for
achieving the strength of the mentioned elements. This can be achieved by the efficient action of
the management.

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Financial Forecasting for 2015


1. Sales Forecast (Shinepukur & RAK Ceramics)
Forecasting is an essential part of the planning process, and a sales forecast is the most important
element of financial forecasting. The sales forecast generally starts with a review of sales during
the past years.
If we consider the sales of RAK and Shinepukur Ceramics of last 3 years, we can see a volatility
of growth. Though, Shinepukur is showing a negative growth rate and RAK is showing positive
growth. But, for our forecasting, we are going to consider the sales have to be 10% increased
both for Shinepukur and RAK for 2015.
From the data and graphical representation given below, we can easily find out the trend of salesgrowth of the two companies. Now, we are going to analyze the impact of our forecasted sales
over the financial data.
YEAR
2012
2013
2014
2015 (Forecasted)

SCL Sales (Revenue in Millions)


BDT 1,942.351
BDT 1,692.445
BDT 1,677.658
BDT 1,845.424

RAK Sales (Revenue in Millions)


BDT 4,507.821
BDT 4,687.262
BDT 5,009.387
BDT 5,510.326

Sales Forecast
SCL Sales (Revenue in Millions)

RAK Sales (Revenue in Millions)

BDT 5,510.326
BDT 4,507.821

BDT 1,942.351
2012

BDT 4,687.262

BDT 1,692.445
2013

BDT 5,009.387

BDT 1,677.658
2014

BDT 1,845.424
2015 (Forecasted)

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2. Forecasted Income Statement & Balance Sheet (SCL & RAK)


Shinepukur Ceramics Limited: Projected 2015 Income Statement & Balance Sheet

Shinepukur Ceramics Limited


Income Statement (Projected)
For the year 2015
2014 Results
Sales (Revenue)
COGS
Gross Profit
Other Income
Operating Expenses

Amount in Taka (mn)


Forecast Basis 2015 Initial Forecast

1,677.658

X 1.10

1,845.424

(1,253.444)

X 1.10

(1,378.788)

424.214
22.627
(165.076)

466.635
(181.584)

Administrative Expenses

(73.013)

X 1.10

(80.314)

Selling and Distribution Expenses

(92.063)

X 1.10

(101.269)

Profit from Operations


Loss on Sale of Shares
Finance Cost

281.764
(258.876)

285.052
(258.876)

22.888
(1.090)

26.176
(1.254)a

21.798
(24.134)

24.922
(12.461)b

Net Loss After Tax for the Year


Other Comprehensive Income:
Fair Value Gain/(Loss) on Investment in Shares

(2.336)

12.461

17.761

17.761

Total Comprehensive Profit/(Loss) for the Year

15.425

30.222

EPS

(0.020)

0.039

Profit/(Loss) Before Contribution to WPPF


Contribution WPPF
Net Profit/(Loss) Before Tax
Income Tax Expense

Notes:
(a) Contribution to workers Profit Participation Funds (WPPF) will be increased by 15%
(b) Income Tax Expense will be half of Net Profit before Tax

16 | P a g e

Shinepukur Ceramics Limited


Balance Sheet (Projected)
For the year of 2015
2014 Results
ASSETS
Non-Current Assets
Property, Plant and Equipment - Carrying
Value
Investment in Shares
Capital Work in Progress
Current Assets
Inventories
Accounts & Other Receivables
Advances, Deposits & Prepayments
Cash and Cash Equivalents
Total Assets
EQUITY AND LIABILITIES
Shareholders' Equity
Issued Share Capital
Revaluation Surplus on Property, Plant
and Equipment
Fair Value Loss on Investment in Shares
Retained Earnings
Non-Current Liabilities
Long Term Loan (Secured)
Long Term Loan (Unsecured)
Gratuity Payable
Deferred Tax Liability
Current Liabilities
Short Term Loan from Banks (Secured)
Long Term Loan-Current Maturity
(Secured)
Creditors, Accruals and Other Payables
Total Equity and Liabilities
Additional Fund Needed

Forecast Basis

Amount in Taka (mn)


2015 Initial Forecast

5,644.821
4,204.123
78.983
1,361.715
1,044.626
671.351
157.873
193.770
21.631
6,689.447

6,065.233
X 1.10

X 1.10
X 1.10
X 1.10
X 1.10

4,624.535
78.983
1,361.715
1,149.088
738.486
173.660
213.147
23.794
7,214.321

4,264.594
1,469.661

4,239.595
1,469.661

2,966.690
(85.988)
(85.768)
627.018

2,966.690
(85.988)
(110.768)a
627.018

BDT 20.0 m

376.276

376.276

92.418
158.324
1,797.835
1,065.658

92.418
158.324
1,852.751
1,065.658

183.015
549.162
6,689.447

183.015
604.078
6,719.364
494.957

X 1.10

Notes:
(a) Additional 20 million taka has been added as retained earnings in forecasted balance sheet for 2015.

17 | P a g e

RAK Ceramics (Bd) Limited: Projected 2015 Income Statement & Balance Sheet

RAK Ceramics (Bd) Limited


Income Statement (Projected)
For the year of 2015

Sales (Revenue)
COGS
Gross Profit
Other Income
Operating Expenses
Administrative Expenses
Selling and Distribution Expenses
Profit from Operations
Net Finance Income
Profit/(Loss) Before Contribution to WPPF
Contribution WPPF
Net Profit/(Loss) Before Tax
Income Tax Expense
Net Loss After Tax for the Year
Other Comprehensive Income:
Total Comprehensive Profit/(Loss) for the
Year
EPS

Amount in Taka (mn)

2014
Results

Forecast
Basis

2015 Initial
Forecast

5,009.387
(3,161.225)
1,848.162
44.076
(1,068.625)
(403.879)
(664.746)
823.613
197.475
1,021.088
(48.623)
972.465
(383.311)
589.154
-

X 1.10
X 1.10

5,510.326
(3,477.348)
2,032.978
29.739
(1,175.488)
(444.267)
(731.221)
887.230
165.625
1,052.855
(55.916)a
996.938
(402.477)b
594.462
-

X 1.10
X 1.10

589.154

594.462

1.750

1.766

Notes:
(a) Contribution to workers Profit Participation Funds (WPPF) will be increased by 15%
(b) Income Tax Expense will be increased by 5% on current year.

18 | P a g e

RAK Ceramics (Bd) Limited


Balance Sheet (Projected)
For the year of 2015

Amount in Taka (mn)


2014 Results

ASSETS
Non-Current Assets

3,180.814

Property, Plant and Equipment

1,798.341

Intangible Assets

Forecast Basis

2015 Initial Forecast


3,361.365

X 1.10

1,978.175

4.815

4.815

Capital work in progress

289.116

289.116

Investment in Subsidiaries

191.600

191.600

Investment in associates

191.600

191.600

Trade and other receivables

518.913

518.913

Loan to subsidiaries and associates

187.146

187.146

6,556.034

6,639.548

Current Assets
Inventories

361.914

X 1.10

398.105

Trade and other receivables

713.050

X 1.10

784.355

Loan Associates

40.661

X 1.10

44.727

Advances, deposits and prepayments

1,912.281

X 1.10

2,103.509

Advance Income Tax

1,774.687

Cash and Cash Equivalent

1,394.695

Total Assets

9,736.848

10,000.913

Equity

6,695.180

6,715.179

Share Capital

3,368.506

3,368.506

Share Premium

1,473.647

Retained Earnings

1,853.026

Non-Current Liabilities
Current Liabilities

41.564
3,000.104

41.456
2,750.847

Short term borrowing

323.755

323.755

Employers benefit payable

70.668

70.668

Trade and other payables

370.177

X 1.10

407.195

Accrued expenses

172.991

X 1.10

190.290

Provision for royalty and technical know-how fee

1,774.687
X 1.10

1,534.165

1,473.647
BDT 20.0 m

1,873.026

Provision for income tax

1,758.939

1,758.939

Total Equity and Liabilities


Additional Fund Needed (AFN)

9,736.848

9,507.482
493.431

From the above forecasted income statement and balance sheet of Shinepukur and RAK
Ceramics Limited, it is estimated that we need additional fund BDT 494.957 and BDT 493.431
additional fund to increase the additional 10% of sales. If we want to meet the additional sales
target to generate revenue on 2015, we need that fund. And the fund may be managed from
external or internal or both sources.
19 | P a g e

3. Raising the AFN and Financing Feedbacks (Shinepukur & RAK Ceramics)
As a manager we can raise the additional fund from different internal and external sources. We
can issue new shares/ use retained earnings/ borrow from financial institutions/ issue notes or
bonds to arrange the additional fund to achieve the forecasted revenue generating target. Besides,
we can also create a mixed source to collect the additional fund. As a manager it is a key concern
to find suitable sources to create fund. Cause too much borrowing or issuing new shares will
never make a firms efficiency. It creates problem of debt management. However, the
borrowings from financial institutions are needed to get rebate from tax. So, having provided a
look on overall sources, we have to find out the way of sourcing our AFN.
Additional Fund Needed
(AFN)

Shinepukur Ceramics Limited


BDT 494.957 millions

RAK Ceramics (Bd) Limited


BDT 493.431 millions

As we know, the used retained earning portion should be covered by the external or internal
financing. As we need to maintain a minimum retained earnings portion for the organization.
Though we use the retained earnings in terms of financing as required additional funds, but we
need to cover the amount through other sources of borrowings.
We can segment the total amount of additional required fund for Shinepukur and RAK on the
basis of collections sources in following ways.

Shinepukur's Funding for AFN


Sources
Retained Earnings
Issued Share Capital
Long Term Loan (Secured)
Short Term Loan from Banks (Secured)
Total Collection of AFN

BDT
BDT
BDT
BDT
BDT

Amount (In Millions)


(5.597)
194.957
131.000
174.597
494.957

RAK's Funding for AFN


Sources
Retained Earnings
Issued Share Capital
Long Term Borrowings
Short term borrowing
Total Collection of AFN

BDT
BDT
BDT
BDT
BDT

Amount (In Millions)


(8.000)
100.431
208.000
193.000
493.431

The funding is segmented by the mentioned way, as it is better to play risk-free. Though interests
are related with borrowings, so it is create cost for long time borrowings. But, it can be paid

20 | P a g e

earlier to reduce that cost. On other side, long time borrowings are well to reduce risk and
additional pressure to pay the debt.
Shinepukurs debt management and financial condition is severe bad. As a manager it is tough to
arrange funding from internal source. So, it is better to collect maximum amount from long term
borrowings, and the rest amount can be collected with issuing new stocks and short term debts.
On other side, RAK is well managed on debt and business. Though it is easy to provide their
debt with the internal source, but it is needed to play safe. Long term debt can reduce their risk
and it can be paid at any time. Time duration can provide them a relaxing environment over here.
Besides, as a manger we can mix-up the funding with some short term borrowings and issuing
common stocks. It can also be helpful for the firm.

4. Analysis of the Forecast (Shinepukur & RAK)


Shinepukur Ceramics Limited
Income Statement (Forecasted)
For the year of 2015
Amount in Taka (mn)
Int. Forecast
Sales (Revenue)
COGS
Gross Profit
Other Income
Operating Expenses
Administrative Expenses

Adj. Forecastg

1,845.424

1,845.424

(1,378.788)

(1,378.788)

466.635
(181.584)

466.635
(181.584)

Adjustment

(80.314)

(80.314)

Selling and Distribution Expenses

(101.269)

(101.269)

Profit from Operations


Loss on Sale of Shares
Finance Cost

285.052
(258.876)

285.052
(263.473)

(4.597)

26.176
(1.254)

21.579
(3.254)

(4.597)
(2.000)

24.922
(12.461)

18.325
(11.461)

(6.597)
1.000

Net Profit/(Loss) After Tax for the Year

12.461

6.864

(5.597)

Other Comprehensive Income:


Fair Value Gain/(Loss) on Investment in Shares
Additional Retained Earning

17.761
-

25.761
(5.597)

Total Comprehensive Profit/(Loss) for the Year

30.222

27.028

0.039

0.024

Profit/(Loss) Before Contribution to WPPF


Contribution WPPF
Net Profit/(Loss) Before Tax
Income Tax Expense

EPS

21 | P a g e

Shinepukur Ceramics Limited


Balance Sheet (Forecasted)
For the year 2015

Amount in Taka (mn)

Ini. Forecast
ASSETS
Non-Current Assets
Property, Plant and Equipment - Carrying Value
Investment in Shares
Capital Work in Progress
Current Assets
Inventories
Accounts & Other Receivables
Advances, Deposits & Prepayments
Cash and Cash Equivalents

Adj. Forecast

Adjustment

6,065.233
4,624.535
78.983
1,361.715
1,149.088
738.486
173.660
213.147
23.794

6,065.233
4,624.535
78.983
1,361.715
1,149.088
738.486
173.660
213.147
23.794

7,214.321

7,214.321

4,239.595
1,469.661
2,966.690
(85.988)
(110.768)
627.018
376.276
-

4,428.955
1,664.618
2,966.690
(85.988)
(116.365)
758.018
507.276
-

92.418

92.418

Deffered Tax Liability


Current Liabilities
Short Term Loan from Banks (Secured)
Long Term Loan-Current Maturity (Secured)
Creditors, Accruals and Other Payables

158.324
1,852.751
1,065.658
183.015
604.078

158.324
2,027.348
1,240.255
183.015
604.078

174.597

Total Equity and Liabilities

6,719.364

7,214.321

494.957

Total Assets
EQUITY AND LIABILITIES
Shareholders' Equity
Issued Share Capital
Revaluation Surplus on Property, Plant and Equipment
Fair Value Loss on Investment in Shares
Retained Earnings
Non-Current Liabilities
Long Term Loan (Secured)
Long Term Loan (Unecured)
Gratuity Payable

194.957

(5.597)
131.000

For the additional fund to earn targeted revenue, the firm should manage the debt on the basis of
above mentioned way. We can easily find the impact of borrowing over the Income Statement
and Balance Sheet of Shinepukur. In ratio analysis, we will get the potential result.

22 | P a g e

RAK Ceramics (Bd) Limited


Income Statement
For the year of 2015

Amount in Taka (mn)

Int. Forecast
Sales (Revenue)
COGS
Gross Profit
Other Income
Operating Expenses
Administrative Expenses
Selling and Distribution Expenses
Profit from Operations
Net Finance Income
Profit/(Loss) Before Contribution to WPPF
Contribution WPPF
Net Profit/(Loss) Before Tax
Income Tax Expense
Net Loss After Tax for the Year
Other Comprehensive Income:

EPS

Int. Forecast

5,510.326
(3,477.348)
2,032.978
29.739
(1,175.488)
(444.267)
(731.221)
887.230
165.625
1,052.855
(55.916)
996.938
(402.477)

5,510.326
(3,477.348)
2,032.978
29.739
(1,175.488)
(444.267)
(731.221)
887.230
159.625
1,046.855
(58.916)
987.938
(401.477)

(6.000)
(6.000)
(3.000)
(9.000)
1.000

594.462

586.462

(8.000)

Additional Retained Earnings


Total Comprehensive Profit/(Loss) for the Year

Adj. Forecast

(8.000)
594.462

578.462

1.766

1.620

On the income statement of RAK, we have tried to draw a scenario about the impact of using
retained earnings. By the time, we have seen the impact of borrowings on interest and tax
payment.

23 | P a g e

RAK Ceramics (Bd) Limited


Balance Sheet
as at 31 December 2012-14

Amount in Taka (mn)

Int. Forecast

Adj. Forecast

Adjustment

ASSETS
Non-Current Assets
Property, Plant and Equipment
Intangible Assets
Capital work in progress
Investment in Subsidiaries
Investment in associates
Trade and other receivables
Loan to subsidiaries and associates
Current Assets
Inventories
Trade and other receivables
Loan Associates
Advances, deposits and prepayments

3,361.365
1,978.175
4.815
289.116
191.600
191.600
518.913
187.146
6,639.548
398.105
784.355
44.727
2,103.509

3,361.365
1,978.175
4.815
289.116
191.600
191.600
518.913
187.146
6,639.548
398.105
784.355
44.727
2,103.509

Advance Income Tax


Cash and Cash Equivalent

1,774.687
1,534.165

1,774.687
1,534.165

10,000.913

10,000.913

Equity

6,715.179

6,807.610

Share Capital
Share Premium
Retained Earnings
Non-Current Liabilities
Current Liabilities

3,368.506
1,473.647
1,873.026
41.456
2,750.847

3,468.937
1,473.647
1,865.026
249.456
2,943.847

100.431

Short term borrowing

323.755

516.755

193.000

Employers benefit payable


Trade and other payables
Accrued expenses
Provision fro royalty and technical know-how fee
Provision for income tax

70.668
407.195
190.290
1,758.939

70.668
407.195
190.290
1,758.939

Total Equity and Liabilities

9,507.482

10,000.913

Total Assets

(8.000)
208.000

493.431

The balance sheet of RAK is showing the scenario of debt and equity, which are adjusted cause
of loans and new share issues. What can be the impact of the borrowings; we can see the things
on ratio analysis portion.

24 | P a g e

Financial Statement Analysis: (Adjusted Data)


SHINEPIKUR's RATIO ANALYSIS: (Adjusted Data)
Current Ratio (Times)
0.57
The current ratio shows that the current liability is more than the current assets. So, we need to focus to
increase the amount of current assets to become free of risk from short-term liabilities.
Inventory Turnover (Times)
1.87
The inventories are not well-managed to minimize the cost of sales. So, it should be managed with an
efficient way.
DSO (Days)
33.88
As it shows the similarity as present year DSO, so we do not have to be worried for that. We just need to
focus on minimize the time period.
TAT (Times)
0.26
It means the assets are not being well managed. So, we have to take action to reduce the cost and
managed the assets efficiently to maximize profit.
Debt Ratio (%)
38.61
The debt ratio has indicated the portions of assets are not sufficient to pay liabilities. So we should be
focus to increase assets to liquidate whenever is needed to pay liabilities.
TIE (Times)
6.63
It is showing the strength to pay interest with net operating expenses. On 2015, the performance may
be good enough.
Profit Margin (%)
1.46
It is showing the profit will be 1.46% higher than the per dollar sales. It is definitely better than previous
years.
ROA (%)
0.37
The amount of ROA is very low. So, it should be increased by proper asset management.
ROE (%)
1.62
The rate of return from every single unit of equity is very low. It can cause severe problem for the firm
for near future.

25 | P a g e

RAK's RATIO ANALYSIS: (Adjusted Data)


Current Ratio (Times)
2.41
The current assets are sufficient to pay the current liabilities. It is a good sign.
Inventory Turnover (Times)
8.73
The inventories are well-managed to minimize the cost of sales. So, it should be managed with an
efficient way and managers should be aware to increase the performance level more to achieve the
competitive advantage.
DSO (Days)
51.24
It is showing constant in terms of current year. So it can be a satisfactory level as it remains equal.
TAT (Times)
0.55
It means the assets are not well managed. So, we have to take action to reduce the cost and managed
the assets efficiently to maximize profit.
Debt Ratio (%)
31.93
To pay liabilities, we need to focus more over here.
TIE (Times)
17.77
It is showing the strength to pay interest with net operating expenses. On 2015, the performance may
be good enough.
Profit Margin (%)
10.50
It is showing the profit will be 10.50% higher than the per dollar sales. It is definitely better than
previous years.
ROA (%)
5.78
The amount of ROA is satisfactory. But, it should be increased by proper asset management.
ROE (%)
16.68
Rate of return is good for shareholders. Equity is properly managed with the net income of the
organization. But, proper asset management should be increased.

26 | P a g e

Comparison on Financial Statement Analysis: (Adjusted Data)


Ratios

Shinepukur

RAK

Current Ratio (Times)

0.57

2.41

Inventory Turnover (Times)

1.87

8.73

DSO (Days)

33.88

51.24

TAT (Times)

0.26

0.55

Debt Ratio (%)

38.61

31.93

TIE (Times)

6.63

17.77

Profit Margin (%)

1.46

10.50

ROA (%)

0.37

5.78

ROE (%)

1.62

16.68

Comments
The asset management is far
better of RAK than Shinepukur to
recover their liability. It indicates a
strong liquidity power of the
organization.
Inventory is highly managed for
production purpose by RAK. It is a
competitive
advantage
over
Shinepukur.
Shinepukur has the capability to
collect the receivables from the
market within a shortest time. It is
definitely a good sign. So, RAK
should try to minimize the thing.
Though RAK is showing more
efficiency in this section, but both
of them are staying near to each
other. They should be more focus
to maximize the use of their assets
in terms of earning revenue.
The debt management is showing a
good indicator for RAK. But, SCL is
almost near to them. They both
should be more cautious to
manage liability efficiently in terms
of their assets.
RAK is highly efficient to manage
the interest of their debts with the
net operating income. It is a big
safeguard for the companys
reputation.
RAK has greater cost management
capability and it is indicated by the
margin ratio. SCL should focus
more on that.
The value of the assets is highly
covered with the net income of
RAK. It is a good sign. On other
hand, SCLs condition is too poor.
RAKs equity return strength is 16
times higher than the SCL. Showing
a strong satisfaction level for the
shareholders of RAK.

27 | P a g e

Overall Comparison on Financial Statement Analysis: (Adjusted Data)


From our analytical findings, we can easily say that the forecasted target can be achieved by the
RAK very easily. Though it is tough for Shinepukur, but it is not impossible. RAK is holding a
strong competitive advantage in almost every aspect. But, if we consider about Shinepukur, the
cost, asset, debt and overall management is not satisfactory. To achieve the targeted sales and
rebuild the reputation, it should focus more on the mentioned management system.

Findings
1. Shinepukurs inventory management is not efficient.
2. Cost management is improper for Shinepukur.
3. Asset management is not well designed in Shinepukur.
4. Equity management is not properly managed by Shinepukur.
5. Shinepukurs business does not run efficiently cause of the ineffective managerial decision.
6. RAKs receivable collection process is not good enough.
7. Both the firms have some managerial and functional lackings.
8. Though RAK is running well but the functional management should be improved for both
RAK and Shinepukur Ceramics Limited.

28 | P a g e

Recommendation
After studying the total scenario of the companies, the following recommendations may be
offered for improving present condition of the market as well as its prospects:
1.

Shinepukur and RAK should maintain the liquidity, profitability, asset management and
debt management ratio.

2.

Both companies should follow the ratio analysis and try to improve their loss and
maintain their profit.

3.

Firms should inform its consumers and customers about the new improvement of its
products.

4.

Shinepukur and RAK can encourage its customers (retailers) by providing different types
of trade offers, complementary samples, gift offerings etc.

5.

Companies should confirm the availability of its products for more convenience of the
end users;

6.

Firms should cover as much outlet it can ensuring the availability of the brands.

7.

Firms should make aware all about its brand to the consumers as well as customers for
creating image of brand assistance;

8.

Both companies should focus on asset management.

9.

Debt should be managed properly.

10. They should be concern about stockholders value maximization.


11. Inventories and cost should be maintained efficiently.

29 | P a g e

Conclusion
The desirable qualities of the tableware beauty of design, excellence in making and affordable
price are rooted with the ceramics industries mission and commitment. The tableware is made
to the most exact standards to please the most apprehensive customers. The quality control
supervisors at every stage of production ensure that all items meet the most critical standards in
the world. Giving dignity and distinction to the users, the ceramics industries tableware becomes
centerpiece in any stylish home. It blends together the outstanding technology and timeless
craftsmanship to catapult Bangladesh into the new millennium.
In our country tableware ceramics industry is developing day by day. Already many companies
are in the market and are serving consumers delivering quality products. To compete smartly in
the domestic and international markets companies need to set appropriate financial and
marketing strategies. For setting correct strategies companies need to find out appropriate
financial position. For setting right positioning strategies companies need to know the needs and
requirements of the customers. International players under ceramic industry of Bangladesh are
doing above described activities more or less correctly. If individual organizations can set
appropriate marketing and financial strategies that will be beneficial for the organizations as well
as for the industry. Lots of changes have taken place in tableware ceramics industry in last few
years. Once upon a time consumers were not concerned about shape, design and other factors.
But now-a-days these things are considered. In modern world consumers demand is changing
day by day and they switch companies frequently. So, to retain the consumers is important and it
will be possible when companies will be aware about perception of customers and will be able to
take position according to that perception. By creating competitive advantages companies have
to do something special for customers and by this way company can increase their relative
market share as well as achieve top position also.

30 | P a g e