CREDIT RATING OF

KOHINOOR CHEMICALS LIMITED

CREDIT RATING OF KOHINOOR CHEMICALS LTD.

Submitted to

Avijit Mallik
Lecturer
Institute of Business Administration, University of Dhaka
Course: Financial Information Analysis (F409)

Submitted by

Kidwa Arif (ZR-01)

BBA 25th Batch

Institute of Business Administration

University of Dhaka, Dhaka

June 21, 2020

21 June 2020

Avijit Mallik
Lecturer
Institute of Business Administration
University of Dhaka, Dhaka

Sir

Subject: Submission of Report on The Credit Rating of Kohinoor Chemical Ltd.

As per your instructions for producing a report as a requirement for our undergraduate course
Financial Information Analysis (F409) I would like to present this report titled “CREDIT RATING
OF KOHINOOR CHEMICALS LTD.” This report has been formulated based on data from the
Annual Report of Kohinoor Chemicals Ltd. and other secondary sources. Without your permission,
this report will not be revealed nor reproduced for any other purpose.

I hope this report has met all your requirements and I would like to thank you for letting us work
on this topic.

Thank You
Kidwa Arif
Roll: ZR-01
BBA 25th

i
Table of Contents
Executive Summary ....................................................................................................................... iv
1.0 Introduction ............................................................................................................................... 1
1.1 Company Overview .............................................................................................................. 1
1.2 Objectives ............................................................................................................................. 1
1.2.1 Broad Objective ............................................................................................................. 1
1.2.2 Specific Objectives ........................................................................................................ 1
2.0 Methodology ............................................................................................................................. 2
2.1 Data Collection ..................................................................................................................... 2
2.2 Scope ..................................................................................................................................... 2
2.3 Limitations ............................................................................................................................ 2
3.0 Credit Rating ............................................................................................................................. 3
3.1 Quantitative Credit Rating .................................................................................................... 3
3.1.1. Multiple Regression Analysis ....................................................................................... 3
3.1.2 Calculation of Quantitative Credit Rating ..................................................................... 5
3.2 Qualitative Credit Rating ...................................................................................................... 5
3.2.1 Industry Analysis ........................................................................................................... 5
3.2.2 Product Portfolio .......................................................................................................... 12
3.2.3 Keys To Success .......................................................................................................... 17
3.2.4 Company Size and Ownership Structure ..................................................................... 18
3.2.5 Accounting Quality ...................................................................................................... 20
3.2.6 Management Quality .................................................................................................... 21
3.2.7 Qualitative Rating ........................................................................................................ 23
3.3 Final Credit Rating .............................................................................................................. 24
4.0 Conclusion .............................................................................................................................. 24
References ..................................................................................................................................... 25
Appendix ....................................................................................................................................... 27
Appendix 1 ................................................................................................................................ 27

Table of Tables

ii
Table 1: Numerical Values Corresponding To Credit Rating ........................................................ 4
Table 2: Ratios and Credit Rating of Companies ........................................................................... 4
Table 3: The Intercepts and Variables After Conducting Multiple Regression Analysis............... 5
Table 4: Quantitative Credit Rating of Kohinoor Chemicals Ltd ................................................... 5
Table 5: Porter's Five Forces: Rivalry Among Firms ..................................................................... 7
Table 6: Porter's Five Forces: Threat of New Entrants ................................................................... 8
Table 7: Porter's Five Forces: Threat of Substitutes ....................................................................... 8
Table 8: Porter's Five Forces: Bargaining Power of Buyers ........................................................... 9
Table 9: Porter's Five Forces: Bargaining Power of Suppliers ..................................................... 11
Table 10: Major Products of Kohinoor Chemicals Ltd. ............................................................... 16
Table 11: Key to Success of Kohinoor Chemicals Ltd ................................................................. 18
Table 12: Indicators to Understand Company Size ...................................................................... 19
Table 13: Balance at 30 June 2019 for Statement of Equity......................................................... 21
Table 14: Qualitative Rating Calculation ..................................................................................... 24
Table 15: Regression Statistics ..................................................................................................... 27
Table 16: ANOVA Table .............................................................................................................. 27
Table 17: Regression Analysis...................................................................................................... 27
Table 18: Regression Analysis...................................................................................................... 28

iii
 Executive Summary

This report tried to find the Credit Rating of Kohinoor Chemicals Ltd. using secondary data. The
rating calculation has been divided into two main parts: Quantitative and Qualitative.

The Quantitative Analysis has been done by doing a multiple regression analysis of thirteen
companies of relevant industries. Since not enough industries in the FMCG sector were
available, the Pharmaceutical and Chemical Industry companies were also utilized. The ratios
used for the multiple regression analysis were Return on Equity, Return on Average Assets,
Debt-Equity Ratio, Current Ratio, Operating Profit Margin and Net Profit Margin. The numerical
value of the quantitative credit rating came out to be 13.76.

The qualitative rating was given based on six factors: i) Industry Analysis, ii) Product Portfolio
iii) Keys To Success, iv) Company Size and Ownership Structure v) Accounting Quality and vi)
Management Quality. The ratings given on these factors were subjective and the numerical value
of the final Qualitative Rating came out to be 16.406.

The final rating, which was an average of the quantitative and qualitative rating came out to be
15.803 or A. Since the actual credit rating of Kohinoor Chemicals Ltd. was not available, it was
not possible to verify the accuracy of this rating. However, the best possible procedures were
ensured.

iv
1.0 Introduction
The purpose of credit rating is to determine if a company shall be able to fulfill its financial
obligations. This paper looks into both the quantitative and qualitative aspects of Kohinoor
Chemicals Ltd. and formulates a credit rating.

1.1 Company Overview

Kohinoor Chemicals Ltd. was founded in 1956 and was first listed for IPO in 1988 in Dhaka
Stock Exchange. It was listed in the Chittagong Stock Exchange in the year 1996. Its business
activities include production of toiletries, cosmetics and beauty products.

1.2 Objectives

1.2.1 Broad Objective

To find out the credit rating of Kohinoor Chemicals Ltd.

1.2.2 Specific Objectives

❏ To identify and find the ratios necessary to give a credit rating
❏ To compare the ratios of different relevant companies and find the quantitative credit
rating
❏ To find the qualitative credit rating by giving subjective ratings of different aspects of the
company
❏ To find the final rating by computing the average of the quantitative and qualitative
ratings

1
2.0 Methodology

2.1 Data Collection

All data collected were through secondary sources. The major portion of the qualitative rating
used information from the 2018-19 Annual Report of Kohinoor Chemicals Ltd. All the
remaining secondary sources have been mentioned in the reference section of the report.

2.2 Scope
The scope of this report is confined to the Fast Moving Consumer Goods (FMCG) industry of
Bangladesh. However, the quantitative portion also used data from the Chemical and
Pharmaceutical Industry and those can be included in the scope as well.

2.3 Limitations
❏ The Annual Reports used were those of 2019. Thus, they might not reflect the recent
scenario of the companies.
❏ The Post Covid-19 situation could not be properly depicted due to lack of data. However,
the industry analysis part has some discussion on it.
❏ The quality of the qualitative discussion could have been better if it were possible to
collect some primary data from employees of Kohinoor Chemicals Ltd.

2
3.0 Credit Rating

3.1 Quantitative Credit Rating

3.1.1. Multiple Regression Analysis

3.1.1.1 Company Selection

The multiple regression analysis has been done based on the credit ratings of 13 relevant
companies. Due to maintaining the accuracy of a multiple regression, it is important to put in as
many inputs as possible. However, the only listed companies relevant to Kohinoor Chemicals
Ltd. were Marico Ltd., ACME Laboratories Ltd. and Keya Cosmetics. For this reason, the other
companies chosen were from the Pharmaceutical and Chemical sector. While these companies
do not produce similar products as those of Kohinoor Chemicals Ltd., they were all listed under
the “Pharmaceuticals & Chemicals” sectors. Thus, they were picked for the multiple regression.

3.1.1.2 Ratio Selection

The purpose of Credit Rating is to rate a company or a person based on their capabilities to fulfill
their financial commitments, which are debts in most cases. The six following ratios have been
selected keeping this in mind.
Return on Average Assets (ROA): This ratio indicates how profitable a company is compared
to its average assets. It is a good indicator to understand the long term sustainability of a
company.
Return on Equity (ROE): The return on equity shows how effectively a company is utilizing
the funds supplied by the shareholders. It can help the debtors understand the efficiency of the
company.
Debt Equity Ratio (D/E): This ratio indicates a company’s financial leverage. A company with
too high debt-equity ratio might not be able to pay off further debts.
Current Ratio (CR): The current ratio is an important indicator for debtors because it shows
how much debt a company can pay off with its liquid/current assets.
Net Operating Margin (Op. Margin) and Net Profit Margin (Net Margin): These two ratios
are good indicators to understand the profitability of the company.

3
3.1.1.3 Credit Rating Values

The following table shows the numerical values corresponding to the rating of the CRISIL
values.

Credit Numerical
Rating Rating
AA+ 19
AAA 20
A 15
AA+ 19
AAA 20
A 15
A- 14
A- 14
A 15
AA 18
A 15
A- 14
A+ 16
Table 1: Numerical Values Corresponding To Credit Rating

3.1.1.4 Regression Calculation

The ratios and credit rating of the companies have been found first to run the regression.
Op. Net Credit
Name of Company ROA ROE D-E CR Margin Margin Rating
GlaxoSmithKline(GSK) Bangladesh Ltd. 0.11 0.25 2.47 1.29 0.22 0.14 A
Reckitt Benckiser (Bangladesh) Ltd. 0.18 0.84 3.7 1.04 0.14 0.08 AAA
ACME Laboratories Ltd 0.04 0.08 0.32 0.93 0.125 0.088 A
Marico Bangladesh Ltd. 0.44 1.55 2.51 1.25 0.295 0.23 AAA
Square Pharmaceuticals Ltd. 0.162 0.173 0.07 0.129 0.28 0.273 AAA
ACI Chemicals Ltd 0.0142 0.0382 0.931 1.29 0.076 0.025 A
Keya Cosmetics Ltd. 0.37 0.086 1.2748 2.9243 0.3539 0.1603 A-
Beacon Pharmaceuticals Ltd. 0.0242 0.0395 0.613 2.03 0.069 0.0252 A-
Ambee Pharmaceuticals Ltd. 0.0084 0.058 0.31 0.875 0.069 0.65 A
Beximco Pharmaceuticals Ltd. 0.061 0.1017 0.825 1.04 0.222 0.133 AA
Orion Pharmaceuticals Ltd. 0.0286 0.0501 0.76 2.93 0.12 0.101 A
Silco Pharmaceuticals Ltd. 0.0632 0.0828 0.01 5.56 0.1616 0.177 A-
FAR Chemical Industries Ltd. 0.024 0.032 0.058 2.758 0.241 0.172 A+

Table 2: Ratios and Credit Rating of Companies

After that a regression analysis was run to find the following values to be used to determine the
Quantitative Credit Rating.

4
 Description Coefficients
Intercept 14.89911779
ROA -12.88844342
ROE 4.587264281
D-E -0.040469371
CR -0.686949489
Op. Margin 16.17386667
Net Margin -0.368502918
Table 3: The Intercepts and Variables After Conducting Multiple Regression Analysis

The complete table has been given in the Appendix 1.

3.1.2 Calculation of Quantitative Credit Rating

Here, we calculated the required ratios for Kohinoor Chemicals Ltd., multiplied with the
variables and added the intercept to find out final Quantitative Rating.

ROA ROE D-E CR Op. Margin Net Mrgin Rating

0.087532569 0.190305743 1.15445003 2.45355985 0.075457595 0.051223177 14.1521
Table 4: Quantitative Credit Rating of Kohinoor Chemicals Ltd

Thus the value of the final Quantitative Rating is 14.152 or approximately A-

3.2 Qualitative Credit Rating

3.2.1 Industry Analysis

Kohinoor Chemicals Ltd. falls under the FMCG industry. The FMCG Industry can be divided
into three major categories: a) Food and Beverage b) Personal Care and c) Household Care.
("FMCG Industry Review of Bangladesh", 2019). Kohinoor Chemicals Ltd. mainly falls under

5
the Personal Care and Household Care categories. A Porter’s Five Forces based on this industry
has been discussed below.

3.2.1.1 Porter’s Five Forces

Rivalry Among Existing Firms: HIGH

Variable Description Decision

Industry Growth Rate The Industry growth rate has Low

historically dependent on the
consumption habits of the
consumers. Even though this has
been growing steadily in the last
few years, it will decline heavily
due to the Covid-19 Pandemic.
Since it is unknown how long the
Coronavirus recession will
continue, the industry growth
might not increase soon.

Degree of differentiation While the products in this High

industry are similar, the degree
of differentiation is determined
by the brand image. Since the top
players have invested a lot in
building up a strong brand
image, the degree of
differentiation is high.

6
Switching Costs Non-Existent Switching cost Low
since FMCG products are low
volume and low prices.

Concentration of Firms Uniliver is the biggest player in High

this industry and has the highest
market share in every brand
category. While there are
numerous small brands, it is
almost impossible for them to
compete with the bigger brands.

Table 5: Porter's Five Forces: Rivalry Among Firms

Threat of New Entrants: HIGH

Variable Description Decision

Economies of Scale Since FMCG products need to be High

produced in high volumes due to
the low margins, Economies of
Scale is high

First Movers Advantage Since Brand Image plays a big High

role in this sector, brands which
entered first have a huge
advantage and have decades of
brand image as protection of
their business.

Access to Distribution & FMCGs have to move fast High

Channels throughout the country. Thus,
access to distribution and
channels is very important.

7
 Table 6: Porter's Five Forces: Threat of New Entrants

Threat of Substitutes: HIGH

FMCG products can have lots of substitutes. For example, bar soap can be substituted by liquid
soaps, detergent powder could be replaced by detergent soap etc.

Variable Description Decision

Relative Price Relative price varies little from Little Variance

substitute to substitute.

Performance For FMCG products, Little Variance

performance also varies little.

Customer Willingness This is the most important Moderate

section for FMCG products.
Most customers prefer to use the
same type of product from the
same brand due to comfort.
However, with proper
communication, it is possible to
change their behaviours. An
example is the introduction of
liquid handwash.

Table 7: Porter's Five Forces: Threat of Substitutes

Bargaining Power of Buyers: MODERATE

Variable Description Decision

Price Sensitivity (Cost as Price Sensitivity is negligible Low

a fraction of buyer since similar products across
income) companies vary little.

8
 Switching Costs Since consumers buy in low Low
volume, switching costs are
negligible

Demand Elasticity Moderate since demand might Moderate

decrease during economic
slowdowns.

No. of Buyers Large number of buyers since High

people across all geographic
locations and socio-economic
classes buy FMCG products.

Volume per Buyer Each buyer does not buy many Low
units of product.

Table 8: Porter's Five Forces: Bargaining Power of Buyers

Bargaining Power of Suppliers: High

The following graph shows the regions from where chemicals are imported for different
industries in Bangladesh. ("Bangladesh | Chemicals | Import | from all Countries | 2015 | WITS | Data", 2015)

9
 Variable Description Decision

Price Sensitivity (Cost as The price of chemical raw Low

a fraction of buyer materials are dependent on the
income) global economy and the
companies have little say over it.

Switching Costs Switching costs are high since High

finding a new importer is
expensive.

Demand Elasticity Demand elasticity depends on Moderate

the demand of consumers.

No. of Suppliers Overall, there are a decent Moderate

number of chemical suppliers

10
 globally. ("Bangladesh | Chemicals |
Import | from all Countries | 2015 |
WITS | Data", 2015)

Volume per Supplier A large amount of raw materials High

are bought from a single supplier

Table 9: Porter's Five Forces: Bargaining Power of Suppliers

3.2.1.2 Competitor Analysis

While Kohinoor Chemicals Ltd. have a wide variety of products, this report does the competitor
analysis of the top three products which consist of 89% of all sales done by Kohinoor Chemicals.
This has been shown in the table in section 3.2.2 Loan Portfolio.

Toilet Soap: In the toilet soap category, Unilever Bangladesh holds 43% market share with their
brands Lux and Lifebuoy. Kohinoor Chemicals Ltd., Keya Cosmetics and Lily Cosmetics hold
10% market share each. The top selling brand of Kohinoor Chemicals Ltd. is Sandalina.("FMCG
Industry Review of Bangladesh", 2019)

Figure: Top Toilet Soap Brands of Bangladesh

Detergent Powder and Soap: While no proper data could be found on the current market share
of the companies competing in this sector, according to Bangladesh Brand Forum, the top three
brands are Rin Power White, Surf Excel and Wheel. The products by Kohinoor Chemicals Ltd.
are not among the top three.("11TH BEST BRAND HONORS THE MOST LOVED BRANDS
OF BANGLADESH", 2019)

11
3.2.1.3 Industry Risk Factors

The Porter’s Five Forces and the Competitor Analysis have pointed out the following industry
risks
❏ The industry growth might be hindered due to the decrease in consumer purchases due to
the Covid-19 pandemic.
❏ Due to low differences among products, consumers can easily switch to other companies.
❏ Multinational companies like Unilever and Marico are dominant compared to local
companies like Kohinoor Chemicals Ltd.
❏ The Covid-19 pandemic might affect the supply of raw materials.

3.2.1.4 Rating

Based on the analysis, we see that the FMCG Industry is highly competitive and ruled by large
multinationals. Moreover, it might see a declining growth due to the pandemic. Thus the final
rating has been determined to be A or 15 in numerical value.

3.2.2 Product Portfolio

Kohinoor Chemicals have a wide product range of products which include 12 brands and 79
stock keeping units. An overview of their products have been given below.

Sl. Product Name Product Type Product Picture

No.

1 Sandalina Bathroom Soap

12
2 Tibet Ball Soap Washing Soap

3 Tibet Detergent Powder Washing Powder

4 Tibet Laundry Soap Washing Soap

5 Tibet 570 Laundry Soap Washing Soap

6 Tibet Pumpkin Hair Oil Hair Oil

13
7 Tibet Meditated Hair Oil Hair Oil

8 Tibet Chandan Atar Perfume

9 Tibet Luxury Soap Bathroom Soap

10 Tibet Prickly Heat Powder Body Powder

11 Tibet Snow Skin Care Product

14
12 Tibet Luxury Talcum Powder Body Powder

13 Tibet Leather Shaving Cream Shaving Cream

14 Tibet Pomade Skin Care Product

15 Beautina Moisturizing Body Lotion Skin Care Product

16 Beautina Face Wash Skin Care Product

15
 17 Beautina Hair Oil Hair Oil

18 Tibet Petroleum Jelly Skin Care Product

19 Tibet Lip Gel Skin Care Product

20 Tibet Glycerin Skin Care Product

21 AmPm Toothpaste Toothpaste

Table 10: Major Products of Kohinoor Chemicals Ltd.

Apart from these, Kohinoor Chemicals also have a number of other products ranging from
toothpastes to toilet cleaners. Thus, it can be said that their product portfolio is vast and
diversified. However, to understand if that is true, this report looks into their revenue

16
shares.("KOHINOOR CHEMICAL COMPANY (BANGLADESH) LTD. : Shareholders Board
Members Managers and Company Profile | MarketScreener", 2019)

Source: Market Screener

Thus, 89% of their products depend on three product types. Thus, despite having a diversified
product portfolio, it can be argued that they are dependent on revenue streams of few specific
products to survive.

3.2.2.1 Rating

As we can see, Kohinoor Chemicals has a very diversified product portfolio. This is a good
indication since it means that if one fails, the other can balance it out. However, despite having
so many products, a majority portion of its revenue stream depends on the top few products.
Keeping these in mind, the qualitative rating for this section is A+ or 16.

3.2.3 Keys To Success

The following table discusses the keys to success for Kohinoor Chemicals Ltd. and rates them.

17
 Key to Description Credit Numerica
Success Rating l Value

Tibet Brand Tibet is one of the oldest brands in Bangladesh which AA 18

started with the launch of Tibet Snow in 1956. This
brand now has a number of products and is iconic in
Bangladesh.

Market Kohinoor Brands have made a position among the lower AA- 17
Position income segment in the rural areas. This loyal consumer
base is a source of sustainable revenue.

Table 11: Key to Success of Kohinoor Chemicals Ltd

Thus, the average numerical value from these ratings is, 17.5.

3.2.4 Company Size and Ownership Structure

With an authorized capital of 500 million BDT and a market capitalization of 9542 million BDT,
Kohinoor Chemicals Ltd. is a fairly large company. The table below looks at a few other
indicators to judge the size of the company

Indicator (In BDT 2017-18 2018-19 Growth

millions)

Net Sales Revenue 3661.324 3995.8 9.14%

Net Profit 154.497 174.35 12.85%

Operating Profit 229.808 247.162 7.55%

Shareholders' Equity 827.878 881.644 6.49%

18
 Total Assets 1934.13 1899.457 -1.79%

Total Current Assets 1626.305 1585.603 -2.50%

Total Current Liabilities 833.769 646.246 -22.49%

Table 12: Indicators to Understand Company Size

As we can see, the Net Sales, Net profit, Operating Profit and Shareholder’s equity have all
increased. This is positive for the company. However, both total assets and current assets have
declined. This might show a decrease in the company size. However, since the value of total
current liabilities have also decreased and at a much higher rate, the company should not be in
financial trouble due to the decrease in Assets. Regardless, the decline in Assets might be an
indicator that the company isn’t growing.

The ownership structure of the company is shown in the graph below.

The ownership structure shows that a comparatively low portion of the shares belong to the
public which shows that the board of directors have faith in the company.
The determined rating for this section is A+ or 16.

19
3.2.5 Accounting Quality

3.2.5.1 Quality of the Report

The size of the report is 95 pages which is moderate compared to the 172-page annual report of
its competitor Marico Bangladesh Ltd. The information available is also moderate. All necessary
financial information is available but some information which were disclosed in the Marico
Report was not disclosed here. An example is that there was no discussion on their management
procedures.
The rating for this section is A+ or 16.

3.2.5.2 Auditing

The independent auditing was done by S.F.Ahmed and Co. Chartered Accountants. They have
concluded the following from their reporting:
❏ They managed to obtain all necessary information
❏ Proper Books were maintained according to law
❏ The values in the Balance Sheet and Income Statement were coherent with the books of
accounts and returns.
❏ The expenses incurred where for the company’s business
Since their audit report has been fairly flawless, the rating is AA+ or 19.

3.2.5.3 Information Structure

Financial Statements: The Financial Statements were made as per:

❏ Companies Act, 1994
❏ Securities and Exchange Rules, 1987
❏ International Financial Reporting Standards (IFRS)
Financial Summary: The Financial Summary was adequate and consisted of all the required
financial information which would be able to capture the financial health of the company. The
first page discussed the major indicators like Net Sales Revenue, Net Profit, NAV per Share,
Earnings Per Share, Dividend declared and Operating Cash Flows Per Share. The second page
compared 22 ratios of the past five years to discuss the operational result, financial position,

20
financial ratios, ordinary shares information and other data. The last two pages showed the
graphical representation of important indicators and the value added statement.

The value added statement is an important voluntary disclosure which shows the value the
company added among its various stakeholders. The stakeholders mentioned here are employees,
the national exchequer and the shareholders of the company.
Statement of Equity: The final balances in the Statement of Changes in Equity have been
displayed in the table below.

Balance at 30 June 2019 (amount in BDT)

Ordinary Share Revaluation Retained Reserves Total

Capital Reserve of Earnings
Marketable
Securities

168,187,500 31,021,231 675,291,440 7,143,605 881,643,775

Table 13: Balance at 30 June 2019 for Statement of Equity

Information in Notes: The annual reports had sufficient information in the Notes section of the
annual report which properly identify all the important aspects of their accounting.

The financial reporting has been satisfactory for Kohinoor Chemicals Ltd. Thus, their rating is
AA- or 17.

3.2.5.4 Rating

Thus, the final rating of Accounting Quality is, 17.33.

3.2.6 Management Quality

3.2.6.1 Planning

Kohinoor Chemicals Ltd. looks to solve the ever growing demand of cosmetics and personal care
products. However, their main competitor is the multinational company Unilever which has a

21
strong position in the market. Kohinoor Chemicals Ltd. deals with this competition by offering
their product to the lower income customers in rural areas by providing door to door marketing
services.
Kohinoor Chemicals seems to have found a sustainable source of revenue. However, it is also
not commendable that they have decided to target the market not captured by bigger
multinationals instead of trying to capture market share from them. Keeping these in mind, their
rating is A+ or 16.

3.2.6.2 Organizing

The organizational capability can be reflected in the successful company performance. After
coming to IPO in 1988, the company did not raise any fund by any sort of Repeated Public
Offering, Right Issue or Direct Listing. To ensure the sustainability of the organization, it has
risk management policies and it has a periodic monitoring system to mitigate the identified risks.
The risks which are taken into consideration are: i) Industry ii) Regulatory iii) Market, iv)
Operation v) Legal vi) Exchange Rate and vii) Potential Changes in Global and National
Policies.
They have a satisfactory organizational efficiency and have thus been rated A+ or 16.

3.2.6.3 Staffing

Since there was no information on the staffing process of Kohinoor Chemicals Ltd., this report
looks into the secondary source to understand the staffing process of Kohinoor Chemicals
Ltd.("Strategic Human Resource Planning System of KOHINOOR CHEMICAL CO. (BD) Ltd -
The Lawyers & Jurists", 2018)

Kohinoor Chemicals Ltd. plans staff depending on two ways: Need Basis and Growth Basis.
They also have a succession planning process but the process is not published and done at
discretion of management. However, this might increase the chance of unethical practices during
promotions. Thus, their rating here is A or 15.

22
3.2.6.4 Directing

The retirement and re-appointment of directors is governed by the Articles of Association, the
Companies Act 1994. In order to comply with the Act, at least one-third of the directors retire in
every Annual General Meeting.
Their directing procedures are satisfactory and are compliant to necessary laws. Thus, their
rating is AA- or 17.

3.2.6.5 Controlling

The Directors have appointed S.F. Ahmed and Co. as the Statutory Auditors in accordance with
the Companies Act 1994. Moreover, in compliance with the Bangladesh Securities and Exchange
Commission’s notification No. BSEC/CMRRCD 2006, Poddar and Associates have been
appointed the compliance auditors. Controlling procedures are also satisfactory and have been
rated AA- or 17

3.2.6.6 Rating

The final rating under management quality is 16.2.

3.2.7 Qualitative Rating

Factor Numerical
Rating
Industry 15
Analysis
Product 16
Portfolio
Keys To 17.5
Success

Company Size 16
and Structure
Accounting 17.33
Quality
Management 16.2
Quality

23
 Qualitative 16.34
Rating
Table 14: Qualitative Rating Calculation

The combined Qualitative Rating is, 16.34 or approximately A+

3.3 Final Credit Rating

After taking an average of the quantitative and qualitative credit rating, the following has been
determined as the credit rating of Kohinoor Chemicals Ltd:

15.279 or A

4.0 Conclusion
Kohinoor Chemicals Ltd. is a company which has been thriving for about six decades. Thus, the
A Credit Rating might seem too low. However, in the recent past, various multinational
companies have been dominant and they have been taking away Kohinoor Chemical Ltd.’s
market share, which has resulted in this comparatively low rating.

There is no publicly available Credit Rating for Kohinoor Chemicals Ltd. and thus this rating
could not be judged. However, all proper procedures have been followed and it can be assumed
that this has been as accurate as possible under the scope of this report.

24
 References
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ARGUS Credit Rating Services Ltd. (2019). Retrieved 16 June 2020, from
http://www.acrslbd.com/rating-reports

Bangladesh | Chemicals | Import | from all Countries | 2015 | WITS | Data. (2015). Retrieved 12
June 2020, from
https://wits.worldbank.org/CountryProfile/en/Country/BGD/Year/2015/TradeFlow/Import/P
artner/all/Product/28-38_Chemicals#

Credit Rating Information & Services Limited (CRISL). (2019). Retrieved 17 June 2020, from
https://www.crislbd.com/

Debt investors | GSK. (2020). Retrieved 17 June 2020, from https://www.gsk.com/en-

gb/investors/debt-investors/

FMCG Industry Review of Bangladesh. (2019). Retrieved 11 June 2020, from

http://www.eblsecurities.com/AM_Resources/AM_ResearchReports/SectorReport/FMCG%
20Industry%20Review%20of%20Bangladesh.pdf

KOHINOOR CHEMICAL COMPANY (BANGLADESH) LTD. : Shareholders Board Members

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Rating Rationale of Marico Ltd. (2020). Retrieved 17 June 2020, from
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 Appendix

Appendix 1
Regression Statistics
Multiple R 0.875366861
R Square 0.766267141
Adjusted R Square 0.532534283
Standard Error 1.631244524
Observations 13
Table 15: Regression Statistics

ANOVA
df SS MS F Significance F
Regression 6 52.34194012 8.723656686 3.27838861 0.087107967
Residual 6 15.96575219 2.660958698
Total 12 68.30769231
Table 16: ANOVA Table

Description Coefficients Standard Error t Stat P-value

Intercept 14.94129257 1.879710223 7.948721239 0.000210852
ROA -12.43950756 8.605209621 -1.445578679 0.198428135
ROE 5.292897909 2.06870346 2.558558058 0.042992085
D-E -0.173174794 0.667407784 -0.25947374 0.803943142
CR -0.687246203 0.365634489 -1.879598957 0.109215725
Op. Margin 15.92268419 9.247762555 1.72178774 0.135888355
Net Margin -0.447388669 3.254780794 -0.137455853 0.895167199
Table 17: Regression Analysis

Lower Upper
Description Lower 95% Upper 95% 95.0% 95.0%
Intercept 10.34180735 19.54077779 10.34180735 19.54077779
ROA -33.49569696 8.616681849 -33.49569696 8.616681849
ROE 0.230962895 10.35483292 0.230962895 10.35483292
D-E -1.806262811 1.459913223 -1.806262811 1.459913223

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CR -1.581921567 0.20742916 -1.581921567 0.20742916
Op. Margin -6.705775607 38.55114398 -6.705775607 38.55114398
Net Margin -8.411550366 7.516773027 -8.411550366 7.516773027
Table 18: Regression Analysis

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