The Bangladesh Rating Agency Limited (BDRAL)

BDRAL - SME Credit Rating Report

M/S Janani Foam Ghar
Natun Bazar, Mymensingh Road, Madhupur, Tangail - 1996, Bangladesh

Surveillance Rating: SE 3 Rating Outlook: Developing

Issue Date: 1 July, 2020 Valid Till: 30 June, 2021
Legal Form: Proprietorship

Initial Rating Scale: SE 3 declared as on 4 June, 2018

Risk Weight (%) as

BB Scale Score per RBCA guideline BDRAL Scale Credit Quality
of BASEL II
SME 1 90+ 20 SE 1 Highest

SME 2 81-90 40 SE 2 High

SME 3 71-80 60 SE 3 Above Average

SME 4 61-70 80 SE 4 Average

SME 5 51-60 120 SE 5 Below Average

SE 6*

SME 6* <50 150 SE 7* Lowest

SE 8*
*SE or ME 6/7/8 indicates the BDRAL default rating

This rating is a one-time exercise. This rating is valid for a period of one year; subject to however, no
significant changes/events occur during the period which could materially affect the business and financial
parameters of the organization/project. BDRAL recommends that the user of the rating may seek a review of
the rating, if the rated entity experiences significant changes/events in the business. It is recommended for
review in the next financial year.

Contact Analysts:
Nazmoon Nahar (Nazmoon.Nahar@bdral.com)
Syeda Ferdousi (Syeda.Ferdousi @bdral.com) MIS Ref: 20/2110

Better Insight- Better Business

 BDRAL SME Credit Rating Report

M/S Janani Foam Ghar

Rating Summary

Report Issue Date Valid Till BB Scale BDRAL Scale Credit Quality
1 July, 2020 30 June, 2021 SME 3 SE 3 Above Average

4 June, 2018 3 June, 2019 SME 3 SE 3 Above Average

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Scope of the Report

History & Legal background
Existing operations
Management background
Bankers
Financial Analysis

Information Sources
Information given in this report is compiled on the basis of information obtained from the following sources:
Banker’s Database
Field Visit report
Industry Analysis

Methodology
The Bangladesh Rating Agency Limited (herein after referred to as “BDRAL”) rating frameworks consider a
number of financial and non-financial parameters of the enterprise and regulations and industry specific dynamics.
BDRAL believes that the industry in which a SME operates has a direct bearing on the overall performance of the
SME and therefore rates SMEs based on industry benchmarks. BDRAL Rating is a comprehensive assessment of the
enterprise taking into considerations the overall financial and non-financial performance of the subject company
vis-à-vis the other peers in the industry in the same line of business and size criteria. Based on its assessment and
understanding BDRAL has developed rating methodology framework which mainly addresses the following areas

A) Industry Risk
B) Business Risk
C) Management Risk
D) Financial Risk
E) Security Risk
Please visit www.bdral.com for the detailed SME Rating Methodology.

Limitation:
 Due to unavailability of Audited Financial Statements, we had to rely on the Unaudited Account Financial
Statements as provided by the banker of "M/S Janani Foam Ghar" as on 31st December 2019. The outcome of the
rating grade was based on client financial and non-financial information.

 Customer Point Verification could not be conducted due to COVID-19 lockdown and non-availability of clients. No
contact point verification of field visit was done in this case. This report prepared on client information (Financial
& Non-Financial) provided by the banker.

Rating Based on Unaudited Financial Statements- considered on year on year increase & cumulative and other
qualitative as well as quantitative information up to the date of rating declaration.

Report Date: July 01, 2020

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Company Profile

Introduction
M/S Janani Foam Ghar is a sole Proprietorship entity. It is a wholesaler and retailer of different types of foam,
bed cover sheet and plastic furniture and dealer of RFL Group. It was established in 2003 with an initial
investment of BDT 1,500,000 only.
Location or Establishment Details
The business unit is located at Natun Bazar, Mymensingh Road, Madhupur, Tangail- 1996. It operates on
rented premise. It has a valid trade license (No. # 0417) issued by Madhupur Pouroshava, Tangail. The shop
was clearly marked by a signboard.
Business Operation
It comprises as a wholesaler and retailer of different types of foam, bed cover sheet and plastic furniture and
dealer of RFL Group. The goods are procured from local suppliers and sold to local customers. Since inception,
the Proprietor maintains all operating activities with the coordination of six (06) fulltime employees. It has
good marketing and sales network.
Management
The business was established by Mr. Salim Hossen. He had completed Secondary School Certificate
examination and initiated entrepreneurial efforts in 2003. The Proprietor himself manages all operating
activities of the business.
Supplier and Customer Base
All merchandise are procured from local suppliers to fulfill the demand of local customers. It has a wide
customer base. The Proprietor has a good relationship with suppliers and customers.
Bank Facility
The Proprietor avails Cash Credit (Hypothecation) Limit facility from National Credit & Commerce Bank
Limited, Madhupur Branch, Tangail.

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1.00

Sole Proprietor's/Partner'(s)/Executives' Information

Name : Mr. Salim Hossen

Year of Birth : 31/12/1977
Current Title : Proprietor
Appointed to Present : 01/01/2003
Position
Education : High school
Secondary School Certificate
Related Experience Since : 2003
Active in Daily Operations : Yes
Holds : 100% Share
Personal Net worth : Bangladesh Taka 25,100,000 as on 22/06/2020

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Snapshot

ENTITY NAME M/S Janani Foam Ghar

HO ADDRESS Natun Bazar, Mymensingh Road, Madhupur,
Tangail - 1996, Bangladesh
TELEPHONE 8801716914082
BDRAL RATING SE 3
REGISTRATION NUMBER 0417
BANK DETAILS National Credit & Commerce Bank Limited
Madhupur Branch
Tangail-Mymensingh Road, Madhupur, Tangail.
DATE OF INCORPORATION 01/01/2003
NUMBER OF EMPLOYEES 7 Fulltime
IMPORTS No
SALES TERRITORY Local
SALES BDT 70,000,000.00 Actual for the FY 2019
TANGIBLE NET WORTH BDT 13,000,000.00 Actual for the FY 2019

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Key Financials of the Company

Figures in BDT Actual

Key Financial Indicators

31/12/2019
Current Assets 22,500,000.00
Working Capital 11,500,000.00
Total Tangible Assets 24,000,000.00
Tangible Net worth 13,000,000.00
Cash & Bank 500,000.00
Accounts Receivable 2,000,000.00
Fixed Assets 1,500,000.00
Accounts Payable 1,000,000.00
Inventory 20,000,000.00
Sales 70,000,000.00
Net Profit or Loss\Earnings After Taxes [EAT] 5,869,000.00

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Salient Features
STRENGTHS

It deals in essential product and demand is almost stable throughout the year.

Good sales and strengthening marketing network increases turnover of the business.

WEAKNESSES

Fluctuating prices of merchandises can hamper profitability.

Supply chain management is required to be streamlined to bridge the gap among the intermediaries.

OPPORTUNITIES

Diversification of products might excel profit margin.

New selling arrangements might boost up sales volume.

THREATS

Product life cycle is very short due to rapid change in taste.

Pricing pressure from other wholesalers might hamper the profit margin.

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Operations
The business is occupied with wholesaling and retailing of different types of foam, bed cover sheet and plastic
furniture and dealer of RFL Group. All of its merchandise are procured from local market. Both purchases and
sales are made through cash and credit basis.

Major Products

 Foam
 Bed Cover Sheet
 Chair
 Dining Table
 Garden Demand Chair
 Classic Chair

Major Suppliers

 RFL Group
 Carmo Foam Ltd.
 Tarin Plastic Limited
 Foamex Group
 Bengal Group

Major Customers

 R.A Furniture
 Usman Furniture
 Saiful Islam
 Nazmul Islam

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Sales Territory
Local : 100%

Selling Terms
Local Selling Terms
Acceptance credits 0 to 10 days
Cash

Purchase Territory
Local : 100%

Purchase Terms
Local Purchase Terms
Acceptance credits 0 to 6 days
Cash

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BDRAL SME Credit Rating Report - M/S Janani Foam Ghar
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Bankers

Bank Name : National Credit & Commerce Bank Limited

Branch Name Address 1 Address 2 Telephone and Fax Account Number

Madhupur Branch Tangail-Mymensingh

Road, Madhupur, Tangail.
Loan & Credit Facilities

Name : National Credit & Commerce Bank Limited

Credit Type : Cash Credit (Hypothecation) [Renewed]
Loan Amount : Bangladesh Taka 10,000,000.00
Other Security : Personal guarantee from the proprietor/owner
Legal Mortgage of Property
Note:
We calculate Debt Burden Ratio (0.15) times based on current renewed amount and the collateral forced sale value
against the loan is BDT 18,210,400

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2.00

Financial Statements of M/S Janani Foam Ghar

Individual Balance Sheet

Figures in BDT Actual
Total Assets 31 Dec 2019
Current Assets
Cash in Hand & Bank 0 0 500,000
Accounts Receivables 0 0 2,000,000
Inventory: Stock of Finished 0 0 20,000,000
Goods
Total Current Assets 0 0 22,500,000
Investments
Total Investments 0 0 0
Fixed Assets
Furniture Fixture [Less] 0 0 1,500,000
Accumulated Depreciation

Total Fixed Assets 0 0 1,500,000

Non-Current Assets
Total Non-Current Assets 0 0 0

Total Assets 0 0 24,000,000

Total Liabilities & Equity 31 Dec 2019

Current Liabilities
Short Term loan from Bank 0 0 10,000,000

Accounts Payable 0 0 1,000,000

Total Current Liabilities 0 0 11,000,000
Long Term Liabilities
Total Long Term Liabilities 0 0 0
Equity
Capital 0 0 9,330,000
Cumulative Profit Retained 0 0 3,670,000
Total Equity 0 0 13,000,000

Total Liabilities & Equity 0 0 24,000,000

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Individual Profit & Loss Account

Figures in BDT Actual

For the Period Ended 31 Dec 2019
Months Covered by P/L 12
Net Sales 0 0 70,000,000
Sales 0 0 70,000,000
Total Cost of Goods Sold 0 0 62,000,000
Cost of Goods Sold 0 0 62,000,000
Gross \ Operating Profit [Loss] 0 0 8,000,000
Total General & Administrative 0 0 1,030,000
Expenses
Administrative Expenses 0 0 1,030,000
Operating Profit\Earnings Before 0 0 6,970,000
Interest,Taxes,Depreciation &
Amortization [EBITDA]
Earnings Before Interest & Tax 0 0 6,970,000
[EBIT]
EBIT: [Less] Finance Cost\Interest 0 0 1,101,000
Earnings Before Taxes [EBT] 0 0 5,869,000
Net Profit or Loss\Earnings After 0 0 5,869,000
Taxes [EAT]
Retained Earnings 0 0 5,869,000

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Key Financial Ratios

31 Dec 2019
Leverage Ratio 0.00
Debt to Asset Ratio 0.46
Debt to Equity Ratio 0.85
Profitability Ratio 0.00
Gross Profit Margin (%) 11.43
Net Profit Margin (%) 8.38
Return on Capital Employed (ROCE) (%) 30.30
Return on Assets (%) 24.45
Return on Equity (%) 45.15
Coverage Ratio 0.00
Debt Burden Ratio (DBR) (Times) 0.19
Interest Coverage Ratio (Times) 6.33
Liquidity Ratio 0.00
Current Ratio 2.05
Quick Ratio 0.23
Efficiency Ratio 0.00
Cash Conversion Cycle (Days) 122
Inventory Outstanding (Days) 118
Inventory Turnover (Times) 3.10
Account Receivables (Days) 10

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Site Visit Comments

3.00

Age of Business >10 years

Nature of Business Trading
Legal Status of the Business Proprietorship
Business Premise Rented
Business Outlook (as per company) Favorable
Mode of Sales Partly Cash
Purchase Khata / Vouchers Haphazardly Maintained
Sales Khata/Vouchers Haphazardly Maintained
Utility Bills Properly Maintained
Property Papers Properly Maintained
Trade License Available
Whether the unit is operational at the time of visit No
Second Line / Succession Ready Succession
Business Status Self-run business
Tenure of Owner staying at the present residence >5 Years
address
Average length of relationship with major supplier >5 Year
How far are the suppliers from the point of sale Greater than average
Fire in premises affecting operations No
Government Policy toward Industry Favorable
Nature of the Product Desirable
Personnel Policy Excellent
Collateral Coverage (Property Location) Registered Mortgage on Pourashava
Working Environment/Team Work Very Good
Personal Deposits No depository relationship
Support (Guarantee) Capable Personal Guarantee or Corporate Guarantee
with high net worth or Strong Corporate Guarantee

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SME RATING SYMBOL

RATINGS
BDRAL Ratings reflect the borrower’s capacity to meet its financial commitments due within one year.
RATING DEFINITION
ME1,SE1 Highest- Excellent Financials, excellent operating environment, no default history, exceptionally strong
capabilities for timely payment of financial commitments, credit facility fully secured, and i.e. Fully cash
covered, fully covered by government guarantee, covered by guarantee of top tier international bank.
An Institution rated ME1, SE1 has an exceptionally strong capacity to meet its financial commitments and
exhibits a high degree of resilience to adverse developments in the economy, and in business and other
external conditions. These Institutions typically possess a strong balance sheet and superior earnings record.

ME2,SE2 High - Very good Financials, excellent operating capacity, strong capability for timely payment of financial
commitments, very low probability to be adversely affected by foreseeable events, excellent
liquidity and low leverage, well established client base and market share, very good management skill &
expertise.
An Institution rated ME2, SE2 has a very strong capacity to meet its financial commitments, and is generally in a
position to withstand adverse developments in the economy, and in business and other external conditions.
These Institutions typically possess a good track record and have no readily apparent weaknesses.
ME3,SE3 Above Average - Good Financials, stable operating capacity, average capability for timely payment of financial
commitments, very low probability to be adversely affected by foreseeable events, adequate liquidity and
earnings, acceptable management.
An Institution rated ME3, SE3 has a strong capacity to meet its financial commitments but is somewhat more
susceptible to adverse developments in the economy, and to business and other external conditions than
Institutions in higher-rated categories. Some minor weaknesses may exist, but these are moderated by other
positive factors.

ME4,SE4 Average - Average Financials, average operating environment, average capability for timely payment of financial
commitments. Financial commitments, although being met, but continuity of this may be contingent upon a
sustained, favorable business and economic environment. These borrowers have an above average risk due
to strained liquidity, higher than normal leverage and/or inconsistent earnings. Weaker
business credit and early warning signals of emerging business credit detected.
An Institution rated ME4, SE4 has adequate capacity to meet its financial commitments. While some
shortcomings are apparent, the Institution is generally in a position to resolve these within an acceptable time
frame. However, adverse developments in the economy and in business and other external conditions are likely
to weaken its capacity to meet its financial commitments.

ME5,SE5 Below Average - Weak Financial strength, unstable operating environment. Financial commitments, although
being met, but continuity of this may be in question. Severe management problems exist.
An Institution rated ME5, SE5 exhibits some obvious weaknesses in its operating practices and key financial
indicators. The Institution’s financial performance has typically fallen below peer group standards. Although
currently able to meet its financial commitments, the Institution’s financial capacity over the medium and
longer terms is vulnerable to adverse developments in the economy, and in business and other external
conditions.
ME6,SE6 Lowest - Very weak intrinsic Financial strength, severe management problems exist, capacity or inclination to
ME7,SE7 repay is in doubt.
An Institution rated ME6, SE6 or ME7, SE7 or ME8, SE8 exhibits fundamental weaknesses in its operating
ME8,SE8 practices and key financial indicators. Although currently able to meet its financial commitments, the
Institution’s future financial capacity is regarded weak and more vulnerable to adverse developments in the
economy, and in business and other external conditions. Default Rating as per BB.

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RATING OUTLOOK
BDRAL Rating Outlook assesses the potential direction of the Institutions Rating over the intermediate
term (typically over a one year period). The Rating Outlook may either be:
POSITIVE Which indicates that a rating may be raised;
NEGATIVE Which indicates that a rating may be lowered;
STABLE Which indicates that a rating is likely to remain unchanged;

DEVELOPING Which indicates that a rating may be raised, lowered or remain unchanged.

-----------------------------------------------------------------Disclaimer------------------------------------------------------------------------------
The Credit Rating Report is the possession of The Bangladesh Rating Agency Limited (BDRAL). The Credit Rating Report
and all information contained herein shall not be copied or otherwise reproduced, repackaged, further transmitted,
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means whatsoever, by any person without BDRAL's prior written consent. The Credit Rating Report and all information
contained herein is provided on the basis of information believed by BDRAL to be accurate and reliable as derived from
publicly available sources or provided by the rated entity or its agents. A credit rating is not a recommendation to buy,
sell, or hold any security and no investment decision should be made solely on the basis of a credit rating. BDRAL may
make modifications and/or changes in the Credit Rating Report and all information contained herein at any time, for
any reason. Under no circumstances will BDRAL or its affiliates be liable for any special, indirect, incidental or
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Rating Report and all information contained herein hereby acknowledges that he/she has read this Disclaimer and has
understood it and agrees to be bound by it.
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