Industry Analysis

Zahintex Industries Ltd, a knit garments manufacturer was established in the mid-
2002. The company is also a great concern of Givensee Group Industries Ltd. Since
2002, it has explored the manufacture of Sweater with acrylic, cotton, viscose,
nylon etc. ,yarn with a view to offer the world class readymade garments in
Bangladesh. In June 2002, Zahintex Industries Ltd has initiated a Private Limited
Company and has launched its operation commercially since December 2002.
However, it became a Public Limited Company In March 2010. The business is
initiated with a single unit of 300 China machines. At present it has now grown up
to 09 units with 6000 plus machines including a fully automatic machines unit’s
form Germany, China, and Japan. Moreover, Zahintex Industries is a flagship
company of Givensee Group of Industries Limited, which has a diversified entity
engaged in readymade garments, textiles, and food and non – food allied for
consumers. It also carries a great aspiration to grow up giant resources for
Bangladesh. It has many competitors but some of the major competitors are:

Square Textiles Ltd

Square has many sectors which they manufactures and produces their products
to the consumers. However Square steps into the textiles sector with
establishment of its first unit in 1997. The following year Square stepped on its
second unit in 1998. Furthermore, in the same premises Square established its
third unit on the year 2000.

Rafiq Fabrics Ltd

Another Competitor of Zahintex Ltd is Rafiq Fabrics Ltd. It is one of the leading
manufacturers and exporters of Home Textile Products and it is made ups in
Pakistan. The company is a Private Limited Company and it was established in
1980. They have Power, Auto and Shuttles weaving machines in their facilities and
capacity to produce 1.20 million meters of fabrics monthly.
Bextex Ltd
Bextex Ltd, a sector of Beximco Limited and it is incorporated in Bangladesh as a
Public Limited Company with limited liability on 8th March 1994. It started its
operation in 1995 and also went into public issue of shares and debentures in the
same year. Bextex Ltd is the most modern mill in this sector. It has a capacity of
288 high speed air jet looms in its weaving section and high tech dyeing and
weaving section and a finishing section of a capacity of 100000 yards of finished
fabrics per day. Bextex Ltd also produces cotton and polyester blended yarn
spinning mill with 122000 spindles. It is also one of the largest spinning mills of
the country. Bextex Ltd also produces specialized finished goods of denim clothes
for export to many different countries. It can be said that it for Bextex Ltd is a
major giant competitor for Zahintex ltd.
Ratio Analysis and Findings
 Current Ratio

2013 2014 2015 2016 2017

1.63 times 1.68 times 2.2 times 2.3 times 3.1 times

According to the graph we can see that the company has a Current ratio of 3.1 times in 2017 which is
really good compared to its position in 2013. As the higher the current ratio the better the liquidity
position of the company.

 Quick (Acid Test) Ratio

2013 2014 2015 2016 2017

0.4 times 0.38 times 0.54 times 0.64 times 0.83 times

According to the graph we can see that the company has a Acid Test ratio of 0.83 times in 2017 which is
really good compared to its position in 2013. As the higher the acid test ratio the better the liquidity
position of the company.

 Inventory Turnover Ratio

 2013 2014 2015 2016 2017
1.36 times 1.1 times 0.86 times 0.9 times 0.6 times

According to the graph we can see that the company has an Inventory Turnover ratio of 0.6 times in
2017 which is not good compared to its position in 2013. As the lower the inventory turnover ratio the
more the company can sell over a short period of time.

 Days Sales Outstanding

2013 2014 2015 2016 2017

63.61 days 71.56 days 101.9 days 105 days 129.04 days

According to the graph we can see that the company has Day Sales outstanding of 129.04 days in 2017
which is not good compared to its position in 2013. As the lower the Day Sales outstanding the more
quickly the company can collect its credit sales in a timely manner.
  Fixed Asset Turnover Ratio

2013 2014 2015 2016 2017

1.68 times 1.57 times 1.38 times 1.47 times 0.85 times

According to the graph we can see that the company the Fixed Assets Turnover ratio of 0.85 times in
2017 which is not good compared to its position in 2013. As the higher the Fixed Assets Turnover ratio
the better it is for the company as it is using it’s fixed assets more effectively.

 Total Assets Turnover Ratio

2013 2014 2015 2016 2017

0.7 times 0.61 times 0.5 times 0.52 times 0.36 times

According to the graph we can see that the company the Total Assets Turnover ratio of 0.36 times in
2017 which is not good compared to its position in 2013. As the higher the Total Assets Turnover ratio
the better it is for the company as it is using it’s total assets more effectively.
  Debt Ratio

2013 2014 2015 2016 2017

39% 39% 39% 38% 42%

According to the graph we can see that the company the Debt ratio of 0.36% in 2017 which is not good
compared to its position in 2013. As the lower the Debt ratio the better it is for the company as the
higher the percentage the more the company is indebt to creditors (lenders).

 Times Interest Earned Ratio

2013 2014 2015 2016 2017

0.64 times 0.43 times 0.69 times 0.77 times 0.42 times

According to the graph we can see that the company the Times Interest Earned ratio of 0.42 times in
2017 which is not good compared to its position in 2013. As the higher the Times Interest Earned ratio
the better it is for the company as a higher rate means the company would face less difficulties when it
attempts to borrow additional funds.

 Net Profit Margin

2013 2014 2015 2016 2017

3.38% 2.62% 4.89% 5.67% 4.45%

According to the graph we can see that the company the Net Profit Margin of 4.45% in 2017 which is
better compared to its position in 2013. As the higher the Net Profit Margin the better it is for the
company as a higher rate means the company earns more profit per taka of sales.

 Return On Total Assets

2013 2014 2015 2016 2017

2.36% 1.59% 2.45% 2.92% 1.58%
According to the graph we can see that the company Return on Total assets of 1.58% in 2017 which is
not good compared to its position in 2013. As the higher the Return on Total assets the better it is for
the company as a higher rate means the company is utilizing its total assets more effectively.

 Return On Common Equity

2013 2014 2015 2016 2017

8.72% 5.44% 8.26% 9.42% 5.24%

According to the graph we can see that the company Return on Common Equity of 5.24% in 2017 which
is not good compared to its position in 2013. As the higher the Return on Common Equity the better it is
for the company as a higher rate means the company the company is earning more from shareholders
investment.

 Price/Earnings Ratio

2013 2014 2015 2016 2017

11.27 times 17.39 times 10.05 times 12.56 times 23.9 times

According to the graph we can see that the company Price/Earnings Ratio of 23.9 times in 2017 which is
very good compared to its position in 2013. As the higher the Price/Earnings Ratio the better it is for the
company as a higher rate means the investors are willing to pay more taka of reported profit.

 Market/Book Ratio

2013 2014 2015 2016 2017

1.55 times 1.42 times 1.21 times 1.68 times 1.74 times
According to the graph we can see that the company Market/Book Ratio of 1.74 times in 2017 which is
very good compared to its position in 2013. As the higher the Market/Book Ratio the better it is for the
company as a higher rate means the company can sell its shares at a higher price.

Findings
After the ratio analysis we can see:
 The liquidity position of the company has improved over the last 5 years.
 The asset management ratios have seen no significant improvement over
the last 5 years.
 The Debt management ratio has increased thus resulting in an increase in
overall debts.
 In terms of profitability ratios we found out that the net profit margin has
increased quite significantly but the return on total assets and common
equity has dropped causing the condition of the company to fall.
 In terms of market or book ratio there has been a significant increase
compared to 2013. Thus resulting in an increase in price of overall shares.