Project Report

On
Company Analysis and Improvement Guideline of
GPH ISPAT LIMITED

Department of Management
University of Chittagong

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 Project Report
On
Company Analysis and Improvement Guideline of
GPH ISPAT LIMITED

Submitted to:
Mr. Md. Sharfuddin Rashed
Associate Professor
Department of Management
University of Chittagong

Submitted by:
Asiful Haider
ID No: 13302174
MBA (SCM)
Session: 2016-2017

Department of Management
University of Chittagong

Date of Submission: 21st May, 2020

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 Letter of Submission

21st May, 2020

Mr. Md. Sharfuddin Rashed
Associate Professor
Department of Management,
University of Chittagong.

Subject: Submission of Project Report.

Dear Sir,
It is a great pleasure for me to submit the project report, in accordance to your advice, on
“Company Analysis and Improvement Guideline of GPH ISPAT LIMITED” as a part
of my MBA Program. This report will help to find out related factors and I have tried to
focus on the relevant information which would cover the objectives of the report. But no
doubt, without the sincere co-operation and proper guidance of you, it was not possible for
me to prepare this report.

I hope you will assess my report considering the limitations and mistakes of the study. Your
kind advice will encourage me to do further research in future.

Thank you.

Sincerely yours

Asiful Haider
ID: 13302174
MBA (SCM)
Session: 2016-2017
Department of Management
University of Chittagong.

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 Acknowledgement

The project opportunity I had with “GPH Ispat LTD” was a great chance for learning and
professional development. Therefore, I consider myself as a very lucky individual as I was
provided with an opportunity to be a part of it.
I would like to express the gratefulness from the core of my heart to my supervisor
honorable, Mr. Md. Sharfuddin Rashed, Associate Professor, Department of
Management, University of Chittagong for providing me detailed feedback and advice on
this report. He always gave me his valuable suggestions in making this study.
I perceive this opportunity as a big milestone in my career development. I will strive to use
gained skills and knowledge in the best possible way and I will continue to work on their
improvement in order to attain desired career objectives.

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 Supervisor’s Declaration

This is to certify that the project report entitled “Company Analysis and Improvement
Guideline of GPH ISPAT LIMITED” submitted as a partial fulfillment for the award of
the degree, MBA has been carried out by the student, Asiful Haider bearing ID: 13302174
under my guidance & supervision.

Supervisor

--------------------------------------
Mr. Md. Sharfuddin Rashed
Associate Professor
Department of Management
University of Chittagong

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 Executive Summary

As part of my MBA program, I have completed my project on GPH Ispat LTD. During my
project period I have gained valuable knowledge. So based on my learning and experience I
have completed my project report on “Company Analysis and Improvement Guideline of
GPH ISPAT LIMITED”
In the first chapter, Introduction described the background of the study, the main objectives
of the report and the methodology of the report as well as the sources from where the data
are collected.
The second chapter represents the overall company profile. In this profile contains overview
of the organization, mission and vision of the organization and the products of the
organization.
Third chapter describes industry analysis which includes the overview of Bangladesh steel
industry and Porter’s Five forces analysis..
Fourth chapter discusses the economic analysis of Bangladesh which includes analysis of
various indicators.
Fifth chapter includes External environment analysis using PESTLE.
In chapter six problems, I have discussed the company or internal environment analysis.
In the seventh chapter I tried to find the relevant problems of the company.
Finally Chapter eight discusses about the recommendations regarding the problems using
SWOT Matrix.

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 Table of Contents
Chapter Contents Page

Introduction
1.1 About World Steel Industry 8
One 1.2 Objectives 9
1.3 Methods 9
1.4 Limitations 10
Company Profile
2.1 Brief Discussion About Company 11
Two 2.2 Products 12
2.3 Vision And Mission 13
Industry Analysis
Three 3.1 Overview of Bangladesh Steel Industry 14
3.2 Porter’s Five Forces Analysis 18

Economic Analysis of Bangladesh

Four 4.1 About the Economy of Bangladesh 21
4.2 Economic Analysis 21
Five External Environment Analysis: PESTLE 26

Firm or Company Analysis (Internal Environment)

Six 6.1 VRIO Analysis 28
6.2 Value Chain 29
6.3 Ratio Analysis 32

Problem Identification
Seven 7.1 Opportunities & Threats 42
7.2 Strengths & Weakness 43
45
7.3 Problems
Recommendations
Eight 8.1 SWOT MATRIX 46
8.2 Recommendations to the problems 48
Conclusion 49
Reference 50

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 Chapter One
Introduction

1.1 About World Steel Industry

The global steel industry has been going through major changes since 1970.China has
emerged as a major producer and consumer, as India to a lesser extent .Consolidation has
been rapid in Europe.
Production of crude steel has risen at an astounding rate, reaching 1,689 MN tones by
2017.During the 20th century, the consumption of steel increased at an average annual rate
of 3.3%. In 1900, the United States was producing 37% of the world’s steel, but with post
war industrial development in Asia and centralized investment by China, by 2017 china
alone accounted for about 50% of total global steel market.
According to World Steel Organization, Asia produced 946.8 Mt of crude steel, an increase
of 5.5% over the first nine months of 2017. The EU produced 128.0 Mt of crude steel in the
first nine months of 2018, up by 1.3% compared to the same period in 2017.
North America’s crude steel production in the first nine months of 2018 was 89.7 Mt, an
increase of 3.4% compared to the first nine months of 2017. The C.I.S. produced 76.2 Mt of
crude steel in the first nine months of 2018, up by 1.8% compared to the same period in
2017. (Habib, 2018)

World Steel Production

2000 1808
1669 1730
1800 1650 1620 1627
1538 1560
1600 1433
MILLION TONES

1400
1200
1000
800
600
400
200
0
2010 2011 2012 2013 2014 2015 2016 2017 2018
YEAR

(World Steel Association- 2019)

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 Top 10 Steel producing Countries
Italy 24.5
Brazil 34.9
Turkey 37.3
Germany 42.4
Russia 71.7
South Korea 72.5
United States 86.6
Japan 104.3
India 106.5
China 928.3
0 100 200 300 400 500 600 700 800 900 1000

Million Tones

(World Steel Association- 2019)

1.2 Objectives
1. To learn about the industry.
2. To learn about the company.
3. To recognize the external environment.
4. To recognize the internal environment.
5. To find the problems and give recommendations

1.3 Methods

Data from both the primary and secondary sources were used to make this report.

The primary data sources:

 Face to face interview with employee.

 Information shared over phone call.

The secondary data sources:

 Organizational profile (Website, documents)

 Internet (various search engine)
 Articles
 Books.

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1.4 Limitations of The Study
I tried my best to collect the maximum information from GPH Ispat Ltd. But this report is
not free from short faults. The study has been conducted subject to certain constraints:

 For the company strategy, the authority not providing confidential financial data.
 The rate of success of my study may be limited, as I may have failed to collect
proper information due to lack of our experience.
 It is very difficult to collect data about their departmental activities in separately.
 My personal limitation also contributes greatly in making the study less perfect then
desired.

I, therefore, hope that the study will be evaluated subject to the recognition of the above-
mentioned shortcomings.

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 Chapter Two
Company Profile

2.1 Brief Discussion about Company

2.1.1 GPH Ispat LTD.

One of the leaders of Bangladesh in manufacturing steel promises a super strong future and
economy with its world class products. Not only structural bar, but GPH Ispat Limited is
also one of the producers of low & medium carbon and low alloy Steel Billets in
Bangladesh, the main ingredients of manufacturing graded steel bar. As GPH is ensuring the
highest quality products in Bangladesh as per various international and national standards,
GPH Steel Billets and Bars are getting exported to other countries after nourishing national
demand. The introduction of GPH Ispat Limited has all the potentials to take Bangladesh
quite a few steps forward to a stronger, brighter tomorrow.
GPH Ispat Limited is one of the leading integrated steel manufacturing companies in
Bangladesh engaged in manufacturing and trading of M. S. Billet and M. S. Rod. The
Company was incorporated in Bangladesh on May 17, 2006 as a Private Limited Company
limited by shares under the Companies Act, 1994. The Company converted into a Public
Limited Company along with the subdivision of face value of shares from Tk. 100 to Tk. 10
each and enhanced Authorized Capital from Tk. 1,000 million to Tk. 2,500 million on
December 18, 2009. GPH Ispat Limited came to Initial Public Offering (IPO) in February
2012 and became listed with Dhaka Stock Exchange Limited and Chittagong Stock
Exchange Limited in April 2012. The company enhanced its Authorized Capital from Tk.
2,500 million to Tk. 10,000 million in September 2015. GPH Ispat Limited also issued
03[R]:02 Right Shares in June, 2016.
The commercial production of the factory commenced on August 21, 2008 with an annual
production capacity of MS Billet 84,000 metric ton and MS Rod 120,000 metric ton of
different diameter ranges from 8 mm to 40 mm. In 2012, GPH Ispat increased its production
capacity of MS Billet from 84,000 metric ton to 168,000 metric ton per annum.
Subsequently, the annual production capacity of MS Billet and MS Rod increased to
210,000 metric ton and 150,000 metric ton respectively in the year 2018. At present, GPH

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Ispat is in the process of large-scale expansion of production with the world’s most
advanced technology based on “EAF Quantum Technology” by enhancement of production
capacity of MS Billet 840,000 metric ton and MS Rod, Medium Section Products (Steel
Beam, Angle, Channel, Flat Bar etc.) 640,000 metric ton per annum. After completion of the
said production expansion, the total annual capacity of MS Billet and MS Rod, Medium
Section Products will reach to 1,050,000 metric ton and 790,000 metric ton respectively.

2.1.2 Address
Corporate office: Crown Chamber, 325 Asadgonj, Chattogram-4000, Bangladesh.
Factory: Masjiddah, Kumira, Sitakunda, Chattogram, Bangladesh.

2.1.3 Management
Chairman : Mr. Md. Alamgir Kabir
Managing Director : Mr. Mohammed Jahangir Alam
Additional Managing Director : Mr. Md. Almas Shimul
Directors : Mr. Md. Abdur Rouf
: Mr. Md. Ashrafuzzaman
: Mr. Md. Abdul Ahad
: Mr. Md. Azizul Hoque
2.2 Products
Two types of products are manufactured at GPH ISPAT LTD.
1. BILLET: Size - 100mm X 100mm, 110mm X 110mm, 130mm X 130mm and as per
customers’ requirements).
2. REBAR:
a. Deformed bar
b. Plain bar

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2.3 Vision, Mission and Values

2.3.1 Vision

 To enrich the steel sector of Bangladesh as a beacon of light for others and to help
the country in upcoming infrastructural development.

2.3.2 Mission

 Our Mission is “to provide customers with excellent services and products resulting
in constant improvement and innovation at the highest level of quality"

2.3.3 Values

 We are committed to provide enjoyable work environment for our employees, our
most important resources. We will continually promote teamwork, quality
improvement and excellence in all the places of business for establishing good
governance.
 We will provide products and services of highest quality and value by respond to our
customers with promptness, sensitivity, respect & always with integrity.
 We enrich stakeholders’ interest where employees are our strength, customers are
our Brand Ambassador, and suppliers & service providers are our value chain.
 We meet the challenges of Earthquake with our quality products in strong
infrastructure development to secure the safety of country people.
 We will maintain a financially strong, growth – oriented company for the protection
of our shareholders & employees through leadership & innovation.
 We ensure that our production process is free from environmental pollution.

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 Chapter Three
Industry Analysis

3.1 Overview of Industry

3.1.1 About Bangladesh Steel Industry

Bangladesh is one of Asia's buoyant emerging steel markets and has a growing need for raw
materials and steelmaking technologies. The movement towards a progressive national
economy strongly depends on how the construction materials especially steel related
industries have evolved and such products are readily available. Steel is a basic raw material
for infrastructural development and multiple other uses. Fortunately, the country has a proud
heritage for the art of steel making and shaping for a long time.

The Government of Bangladesh has projected the economy to grow by 8.2% in FY2020.
Meanwhile, Asian Development Bank (ADB) has also forecasted the economy to grow by
8.0% in FY2020, which makes Bangladesh as the fastest growing economy in Asia- Pacific
region. According to industry experts, there is a linkage between a country’s economic
growth and growth in steel consumption. If GDP is expected to grow by 8%, steel industry
should grow by at least 16% per year.

The country’s economic activities took a turnaround in recent period. Increase in VAT and
other regulatory duties, implementation of new VAT law and strict field level enforcement
along with higher market competition, high interest rates and slow private credit growth etc.
has significantly affected industry demand and sales of various industries including steel as
well. Meanwhile, global economic slow-down has also started to affect the economy of the
country. However, our long term view remained positive as the demand for steel will
inevitably grow in line with the country's economic and infrastructural development. Major
buyers of mild steel and re-rolled products include government, individuals and institutional
buyers in the real estate sector. Implementation of the government’s huge infrastructural
development plans have been driving the double digit growth rate in the country’s steel
industry and we expect that the industry will also be enjoying strong growth in the next
decade amid ambitious development initiatives by the government. Besides, growing

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urbanization, industrialization, increased wage earners’ remittance inflows and higher
purchasing power of consumers are accelerating the growth in overall construction sector.

(Haque & Abdullah -2019)

3.1.2 Major Types of Steel

Two types of steel:
1. Long Steel
2. Flat Steel

Different Types of Long Steels

Bar Rebar
Merchant Bars
Structural Beams
Channels & Angles
Tubes Oil country tubular goods (OCTG)

Other tubular products

Different Types of Flat Steels

1. Hot Rolled Sheets
2. Cold Rolled Sheets
3. Galvanized Plain (GP) Sheet
4. Coated Sheet
5. Plates
6. Corrugated galvanized roofing (C.I.) sheets
(Haque & Abdullah -2019)

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3.1.3 Bangladesh Steel Industry is self-reliant

There is no exact year-to-year available data regarding the production and market share of
the steel industry of Bangladesh. However, In terms of production capacity for both finished
and semi-finished (billet) steels Bangladesh is now self-sufficient.

According to the industry players, Bangladesh’s combined annual installed capacity of

producing steel in 2018 was 8.5 million MT and the country has consumed 7.0 million MT
steels which was only 1.6 mill MT a decade ago. Installed capacity of producing steel will
cross 9 million MT by the end of 2019 and the production capacity to increase by another 3-
4 million MT in the next few years after completion of various ongoing and planned
capacity expansion projects by various industry players. It is expected that by 2030, steel
consumption will reach 18 million Tons.

The country’s annual installed capacity for various long steel products like Rod, Angle,
Channel, Bar etc. is around 8.0 million MT and annual demand for long steel is 5.5 million
MT. Besides, within the flat steel products, the country’s present installed capacity is 1
million MT for cold rolled steel and 0.4 million MT for colour coated sheet.

Even though industry capacity is higher than the domestic demand, the industry is exposed
to seasonality. Sales remains sluggish during the rainy season and higher in winter season.
So, actual production remains lower in the dull season. On an average 70-75% capacity
utilization is termed as optimal by the industry players.

The market size of steel is around BDT 450 billion. The local steel market grew at a rate of
15%-20% in last two years from 8-10% per year previously.

Currently, 45 steel mills are the members of Bangladesh Steel Manufacturers Association
(BSMA) who manufacture over 80% of the steel products in the country.2 Moreover, major
industry players are injecting fresh investment in this sector to enhance their production
capacity to grab the potential of huge demand for the implementation of government’s
gigantic infrastructure development plans. (Haque & Abdullah -2019)

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3.1.4 Major Players in Steel Market

Company Name Capacity

(In 1000 MT)

1. Abul Khair Steel (AKS) 1,400.0

2. BSRM Group 1,240.0

3. Kabir Steel Rolling Mills Ltd. (KSRM) 800.0

4. GPH Ispat Limited (GPH) 760.0

5. Mohsteel Limited 500.0

6. Anwar Ispat Limited 360.0

7. Shahriar Steel Mills Ltd. 216.0

8. Baizid Steel Industries Ltd. 206.0

9. Salam Steel Concast Re-rolling Mills Ltd. (SCRM 130.0

10. Ratanpur Steels Re-Rolling Mills Limited 187.2

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3.1.5 Market Share

Market share is the percent of total sales in an industry generated by a particular company.
Market share is calculated by taking the company's sales over the period and dividing it by
the total sales of the industry over the same period. This metric is used to give a general idea
of the size of a company in relation to its market and its competitors.

The following pie chart shows the market share captured by the companies in Bangladesh.

Market Share

26%
38%

20%
3%
4%
9%

BSRM AKS KSRM GPH Ispat RSRM Rest of the companies

(Khan et al., 2018)

3.2 Porter’s Five Forces Analysis

The Five forces model developed by Michael E. Porter has been the most commonly used
analytical tool for examining the competitive environment. It describes the competitive
environment in terms of five basic competitive forces. (Dess et al., 2011)

1. The treat of new entrants.

2. The bargaining power of buyers.
3. The bargaining power of suppliers.
4. The threat of substitute.
5. The intensity of rivalry among competitors.

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Threat of New Entrants

Threat of new entrants is medium due to

 High capital requirement

 High scale economies
 Favorable government policy
 Low product differentiation as it does not fall into the magnificence or specialty
goods.

Bargaining Power of Suppliers

The bargaining power of suppliers is low due to

 Low cost of switching suppliers

 Firm’s effort to produce raw materials by their own

Bargaining Power of Buyers

The bargaining power of buyers is moderate due to

 The products are used in the wide range of industries such as gas, oil and automobile,
shipping, consumer power and durables etc. But the number of reliable sellers is
comparatively low.
 The products are more or less standardized hence the prices are competitive.

Availability of Substitutes

It is medium to low due to

 Although usage of aluminum has been rising continuously in the automobile and
consumer durables sectors, it still does not pose any significant threat to steel as the
latter cannot be replaced completely and the cost differential is also very high.

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Competitive Rivalry

Competitive rivalry is low due to

 Among over 400 active firms in the industry, the top 5 companies serve more than
half of the demand.

(Khan et al., 2018)

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 Chapter Four
Economic Analysis of Bangladesh

4.1 About the Economy of Bangladesh

Bangladesh’s economic freedom score is 56.4, making its economy the 122nd freest in the
2020 Index. Its overall score has increased by 0.8 point, led by a higher score for property
rights. Bangladesh is ranked 29th among 42 countries in the Asia–Pacific region, and its
overall score is well below the regional and world averages.

Bangladesh has made steady albeit incremental progress toward greater economic freedom
during the past five years. Although its economy has remained stuck in the mostly unfree
category, its GDP growth during the same period has been robust. A welcoming attitude
toward foreign investment and restraint on the growth of government may partially explain
the discrepancy.

For Bangladesh finally to break into the ranks of the moderately free, the government would
have to make a sustained, multiyear effort to improve the three rule-of-law indicators and
permit the entry into the country of more international banks and the best practices they
would bring with them. (The Heritage Foundation 2020)

4.2 For economic analysis of Bangladesh I have considered the following indicators:

a) GDP
b) GDP Growth Rate
c) Inflation Rate
d) Per Capita Income
e) Unemployment Rate

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4.2.1 GDP

The Gross Domestic Product measures the value of economic activity within a country.
Strictly defined, GDP is the sum of the market values, or prices, of all final goods and
services produced in an economy during a period of time.

GDP (Billion USD)

350.0
274.0 286.0
300.0
249.7
250.0 221.4
195.1
200.0
150.0
100.0
50.0
0.0
2015 2016 2017 2018 2019

(Trading Economics- 2019)

During the ruling period of this govt. of Bangladesh the economy has come a long way.
Economy has seen a positive change than before. Government works with a vision to
accomplish. This govt. has taken many projects to meet the goal. ICT sector has seen a
revolutionary change which is area of focus by this government. Bangladesh is one of fastest
growing economies in the world now. It has attracted more foreign investment than before.
In 2019 the value of GDP was 286 million USD which is the highest ever.

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4.2.2 GDP Growth Rate

The GDP growth rate indicates how quickly or slowly the economy is growing or shrinking.

GDP Growth Rate%

9.0 7.9 8.2
7.6
8.0 7.1
7.0 6.6
6.0
5.0
4.0
3.0
2.0
1.0
0.0
2015 2016 2017 2018 2019

(Trading Economics- 2019)

Bangladesh has a healthy growth rate of GDP over the past 5 years. It has crossed the 8%
mark for the very first time in the history which shows the growing phase of the economy.
The government intends to keep this rate in the upcoming years.

4.2.3 Inflation Rate

Inflation is the rate at which the cost of goods and services rises over time. It could also be
thought of as a reduction in the value of a currency, because consumers are now able to
purchase less than they previously could with the same amount of money.

Inflation Rate %
6.4
6.2
6.2
6.0
5.8 5.7 5.7
5.6 5.6
5.6
5.4
5.2
2015 2016 2017 2018 2019

(Trading Economics- 2019)

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Though the economy of Bangladesh has seen a upward trend in the recent years but it has
failed to reduce the level of inflation. The inflation is always growing which is a very bad
indicator for economy. It says that purchasing power of people has not improved though the
income is growing.

4.2.4 Per Capita Income

Per capita income is a measure of the amount of money earned per person in a nation or
geographic region. Per capita income can be used to determine the average per-person
income for an area and to evaluate the standard of living and quality of life of the
population. Per capita income for a nation is calculated by dividing the country's national
income by its population.

Per capita Income (USD)

2500.0

1905.0
2000.0 1750.0
1606.0
1458.0
1500.0 1303.0

1000.0

500.0

0.0
2015 2016 2017 2018 2019

(Trading Economics- 2019)

In the recent years, there has been a huge change in per capita income of Bangladesh. Last
year was the highest which was 1905 $. But in the end it has not mattered in a big deal
because a huge number of people live under poverty line and the ever growing inflation rate
has not helped the cause.

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4.2.5 Unemployment Rate
The unemployment rate is the share of the labor force that is jobless, expressed as a
percentage. It is a lagging indicator, meaning that it generally rises or falls in the wake of
changing economic conditions, rather than anticipating them. When the economy is in poor
shape and jobs are scarce, the unemployment rate can be expected to rise. When the
economy is growing at a healthy rate and jobs are relatively plentiful, it can be expected to
fall.

Unemployment Rate %
4.4
4.3
4.3
4.3
4.2 4.2 4.2
4.2
4.2
4.1
4.1
4.1
4.0
2015 2016 2017 2018 2019

(Trading Economics- 2019)

Though GDP of Bangladesh has a very positive trend but not much of a change in the
unemployment rate which indicates that govt. and private have not been able to create
opportunities for the employment seekers up to the expectation. Every year thousands of
fresh graduates are coming out but they are failing to find jobs according to their
expectations. One big reason is their skill level which compels the companies to hire from
abroad. A noticeable number people work in Bangladesh and taking away a big sum of
money. So govt. and private sectors should try and focus on the improvement of skill level
of local people together.

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 Chapter Five
Environment Analysis

5.1 PESTLE Analysis

Analysis of PESTLE, now and then referred to as PEST examination, is an idea for the
promotion of standards. Furthermore, this idea is used by organizations as an instrument to
follow the earth in which they work or intend to dispatch other tasks, items or
administrations, etc.

PESTLE is a thought which in its extended structure means P for political, E for economic,
S for social, T for technological, L for lawful and E for environmental. It provides a 10,000-
foot overview in overall condition from a broad spectrum of edges to be checked and
monitored while mulling over on a particular idea or plan.

1. Political and Legal

Political turmoil turned fierce for quite a while in January and February 2015
upsetting creation, transportation and different administrations. The nation likewise
persevered through strikes, compounding this stun. Instructive organizations shut,
interchanges were hindered and wellbeing lessened.
Government is introducing the various rules and regulations of this particular
industry. The government is about to paying the more attention in the health policies
of the employees which are working with the steel industry. Special health incentives
and rules are introduced in the steel industry.
2. Economic
Bangladesh Steel and Rod Industry is growing as the Bangladesh economy is
charging towards record development figure for the second continuous year, driven
by twofold digit development in assembling and development parts. Gross domestic
product development in monetary 2019-20 is probably going to be 7.8 percent, up
from 8 percent a year sooner, according to the gauge of the Bangladesh Bureau of
Statistics. This is the third back to back year that the financial development was over
7 percent following quite a while of moping in the area of 6 percent.

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 3. Social
Despite boom times, the unemployment rate only declines below 4-5 percent from
time to time. There are persons who move constantly between different economic
fields or between urban communities. At the point when the economy enters
subsidence, unemployment can reach much higher numbers at that point, sometimes
even in the double digits. The organization has constantly looked for the most
capable and goal-oriented individuals to lead it in a regularly changing world with
new challenges in the skyline.
4. Technological
The iron and steel industry is a colossal process industry, and its establishment is
plant design that extends from plant construction and maintenance to increase their
useful life. Despite traditional needs, plant engineering today should meet a broad
range of additional requirements, for example: Higher yield, better quality of the
products and greater quality assurance of the products.
5. Environmental
Though the steel industry is encouraging the many sectors and the encouraging the
development it is creating the unfavorable environment in the nature. The all leading
industries are following the environmental acts which are declared by the
governments, though it is creating very bad impact on the environment. Many
industries are using the pollution control equipment and energy saving equipment but
that is not sufficient in the nature. The least importance is given to the environmental
aspect. (Moon, 2019)

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 Chapter Six
Firm or Company Analysis
6.1 VRIO Analysis
VRIO framework is the tool used to analyze firm’s internal resources and capabilities to
find out if they can be a source of sustained competitive advantage. (Rothaermel, 2013)

VRIO Model

Valuable? Rare? Imitable? Organized? Implication for

Competitiveness
No Competitive
Disadvantage
Yes No Competitive
Parity
Yes Yes No Temporary
Competitive
Advantage
Yes Yes Yes No Unused
Competitive
Advantage
Yes Yes Yes Yes Sustainable
Competitive
Advantage

GPH Ispat LTD

Valuable : Does GPH Ispat LTD offer something valuable? “Yes”
Rare : Is the resources rare? “Yes”
Imitable : Is it imitable? “No”

Competitiveness : So the GPH Ispat LTD is in Temporary Competitive Advantage.

Temporary Competitive Advantage means resource has value and rarity, but is affordable
or easy to copy. It will require considerable effort to stay ahead of competitors and
differentiate services so go back one step and reassess.

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6.2 Value Chain

Value chain is termed as “a chain of value-added activities; products pass through the
activities in a chain, gaining value at each stage”. (Michael E. Porter 1985) First acclimated
the value chain concept in his book “Competitive Advantage: Creating and Sustaining
Superior Performance”. Value chain is utilized to an individual association's inventory
network systems. It needs expansion of significant worth for every single action through
which the item/administration travels through the item life cycle.

The value chain model set up by Porter can be used as a conventional model with five
essential activities and four supporting activities. According to the concept of operations,
with five main operations and six supporting activities, an alternative depiction of the value
chain for the steel manufacturing industry can be used. The state of the stainless steel sector
value chain will be equivalent to that of Porter yet the thing that matters is in a portion of the
activities and their application. The figure on every activity are given as pursues:

6.2.1 Primary Activities

 Inbound Logistics: These include receiving the basic raw materials required for the
steel making process, stacking and reclaiming the materials, and distribution of
materials to various departments etc.

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  Operations/Production Management: These include raw material handling and
processing (receiving and handling of major raw materials like coking coal, iron ore,
fluxes, boiler coal etc., crushing, lump ore crushing and screening), making of coke,
sinter, lime and calcined dolomite, pitch bonded magnesia bricks, production of iron,
steel, wire rods, TMT bars, rounds, squares, structural (angles, channels and beams),
blooms, billets etc. and preparation and repair of rolls.
 Outbound Logistics: These include planning and dispatch, distribution
management, transportation, warehousing, and order fulfilment.
 Marketing and Sales: These include product management, price management,
placement (distribution) management, promotion management, domestic sales
(project sales, actual user sales, retail sales), export sales, sale of special steels, by
products sales, planning and dispatch, pricing and policy, contracts, customer
relations management etc.
 Service after Sales: These include commercial terms, quality aspects, delivery
aspects, pre/post sales contact, and complaint settlement procedure. (Moon, 2019)

6.2.2 Supporting Activities

 Infrastructure: As per earlier decision for enhancement of production capacity of

MS Billet by 840,000 M. Ton and MS Rod/Medium Section Product by 640,000 M.
Ton per annum, they started journey in January 2016. For transforming the dream
into reality, they are working relentlessly. In 2018-19, specially they concentrated on
production expansion project implementation. Despite of various challenges, they are
close to our dream. They are trying our level best to start the trial production and
commercial production as soon as possible.
 Human Resource Management: Competent, skilled, and dedicated human resource
is one of the key pre-requisites for achieving Company’s goals. Moreover, proper
human resource management brings out the important values like trust, reliability,
teamwork, encouragement and relation development between Company’s
management and employees. They have a high standard Human Resource

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 Department which is engaged in job analysis, planning personnel needs, recruiting
the right people for the job, employee’s orientation and training, managing salaries
and wages, providing benefits and incentives, evaluating performance, resolving
disputes and communicating with all employees at all levels. A propitious Human
Resource Policy has been established which ensured long term benefits for all
permanent employees. Employees are provided with basic salary, house rent
allowance, transport allowance/facility, medical, utility & other allowances as per
pay scale. Employees are also provided with long term benefits such as provident
fund, gratuity and group insurance etc. During the year 2018-19, we had total 1,081
permanent officers and workers. They have been taking initiatives for skill
development of our officers, staffs and workers by arranging internal and external
training facilities throughout the year.
 Technology: Technology always plays a vital role for each and every types of
business. Better technology can increase productivity and reduce costs of production.
Firms are exposed to technology risks when there are better technologies available in
the market than the one is used by the company which may cause technological
obsolescence and negative operational efficiency.
The company is aware of technological changes and has adopted new technology
according to its needs. The new plant will substantially increase the production
capacity of the company and further consolidate its position as the country’s leading
steel producers serving the growing domestic and export market. This
“State-of-the-Art” Technology with highest level of automation, precision, and
engineering would ensure world-class products. Furthermore, routine and proper
maintenance of the equipment carried out by the company ensures longer service life
for the existing equipment and facilities.
 Procurement: As steel market price is so volatile, sourcing of raw material is
important. Shortage or price hike of raw materials may affect the Company’s
operation.
The main raw materials of the company are melting scrap, which is available both in
international market and local market from ship breaking yard. The company has

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 bilateral arrangement with a group of independent suppliers of raw materials.
Therefore, it is expected that the company will have smooth flow of raw materials.
(GPH Ispat LTD Annual report 2019)

6.3 Financial Ratio Analysis

Ratio analysis is a quantitative method of gaining insight into a company's liquidity,
operational efficiency, and profitability by comparing information contained in its financial
statements.

Four different types of Financial Ratios:

1. Short term solvency or liquidity ratios

a. Current ratio
b. Quick ratio
c. Cash Ratio
2. Long term solvency or financial leverage ratios
a. Total debt ratio
b. Debt equity ratio
c. Equity multiplier
d. Times interest earned ratio
e. Cash coverage ratio
3. Asset utilization or turnover ratio
a. Inventory turnover ratio
b. Day’s sales in inventory
c. Receivable turnover
d. Day’s sales in receivable
e. Total asset turnover
f. Capital intensity
4. Profitability ratios
a. Profit margin
b. Return on asset
c. Return on equity (Dess et al., 2011)

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 1. Short term solvency or liquidity ratios

a. Current ratio

July 2018-June July 2017-June July 2016-June

2019 2018 2017
Current 8,419,817,759 8,717,684,532 8,120,052,898
Asset
Current 8,205,228,596 8,549,174,333 5,881,993,803
liabilities
Current 1.03 1.02 1.38
Ratio

The current ratio is a liquidity ratio that measures a company's ability to pay short-term
obligations or those due within one year. Acceptable current ratios vary from industry to
industry and are generally between 1.5% and 3% for healthy businesses. So GPH LTD has a
lower current ratio in the last two years.

b. Quick ratio

July 2018-June July 2017-June July 2016-June

2019 2018 2017

Current Asset 8,419,817,759 8,717,684,532 8,120,052,898

Inventory 2,792,059,671 2,862,785,186 2,454,596,463
Current liabilities 8,205,228,596 8,549,174,333 5,881,993,803
Quick Ratio 0.69 0.68 0.96

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The quick ratio indicates a company's capacity to pay its current liabilities without needing
to sell its inventory or get additional financing. A company with a quick ratio of less than 1
cannot currently fully pay back its current liabilities. GPH LTD has got lower quick ratio in
the last two years which means they have lacking in paying current liabilities.

c. Cash Ratio

July 2018-June July 2017-June July 2016-June

2019 2018 2017

Cash 281,773,961 224,343,169 311,332,457

Current 8,205,228,596 8,549,174,333 5,881,993,803
liabilities
Cash Ratio 0.03 0.03 0.05

The cash ratio indicates the amount of cash that the company has on hand to meet its current
liabilities. A cash ratio of 0.2 would mean that for every taka the company owes creditors in
the next 12 months it has 0.2 in cash. 0.2 is considered to be the ideal cash ratio. GPH LTD
has kept good cash ratio in the last three years.

2. Long term solvency or financial leverage ratios

a. Total debt ratio

July 2018-June 2019 July 2017-June 2018 July 2016-June 2017

Total Asset 31,493,025,039 22,694,238,398 12,866,206,824

Total equity 6,335,357,430 5,525,349,832 5,035,603,612
Total debt Ratio 0.80 0.76 0.61

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The debt ratio is a financial ratio that measures the extent of a company's leverage in terms
of total debt to total assets. A debt ratio greater than 1.0 (100%) tells that a company has
more debt than assets. GPH LTD is in good position in terms of total debt ratio.

b. Debt equity ratio

July 2018-June 2019 July 2017-June 2018 July 2016-June

2017
Total debt 25,157,667,609 17,168,888,566 7,830,603,212
Total equity 6,335,357,430 5,525,349,832 5,035,603,612
Debt Equity Ratio 3.97 3.11 1.56

The debt to equity ratio is a financial, liquidity ratio that compares a company’s total debt to
total equity. The debt to equity ratio shows the percentage of company financing that comes
from creditors and investors. A good debt to equity ratio is around 1 to 1.5. GPH LTD has
bigger debt equity ratio which is not a good sing.

c. Equity multiplier

July 2018-June July 2017-June July 2016-June

2019 2018 2017
Total Asset 31,493,025,039 22,694,238,398 12,866,206,824
Total equity 6,335,357,430 5,525,349,832 5,035,603,612
Equity Multiplier 4.97 4.11 2.56

The equity multiplier is a financial leverage ratio that measures the amount of a firm's assets
that are financed by its shareholders. Companies with a low equity multiplier are generally

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considered to be less risky investments because they have a lower debt burden. GPH LTD
has higher Equity Multiplier.

d. Times interest earned ratio

July 2018-June 2019 July 2017-June 2018

EBIT 1,075,126,756 863,656,199

Interest 715,983,556 539,220,206
Times interest earned ratio 1.50 1.60

The times interest earned ratio is an indicator of a corporation's ability to meet the interest
payments on its debt. An organization that has a times interest earned ratio greater than 2.5
is considered an acceptable risk. So, GPH LTD is in good position in terms of this.

e. Cash coverage ratio

July 2018-June 2019 July 2017-June 2018

EBIT 1,075,126,756 863,656,199

Depreciation 175,218,250 112,042,984
Interest 715,983,556 539,220,206
Cash Coverage ratio 1.75 1.81

The cash coverage ratio is useful for determining the amount of cash available to pay for a
borrower's interest expense. The ideal ratio is anything above 1.0. So, GPH LTD looks in
better position according to this.

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 3. Asset utilization or turnover ratio

a. Inventory turnover ratio

July 2018-June 2019 July 2017-June July 2016-June

2018 2017
Cost of goods sold 11,110,755,161 8,211,556,579 6,465,845,702
Inventory 2,792,059,671 2,862,785,186 2,454,596,463
Inventory Turnover 3.98 2.87 2.63

It measures how many times a company sold its total average inventory dollar amount
during the year. The ideal inventory turnover ratio is about 4 to 6. All businesses are
different, of course, but in general a ratio between 4 and 6 usually. It looks like GPH LTD is
improving in terms of this.

b. Day’s sales in inventory

July 2018-June July 2017-June July 2016-June

2019 2018 2017
Days 365 365 365
Inventory Turnover 3.98 2.87 2.63

Day's sale in 91.72 127.25 138.56

Inventory

The day’s sales of inventory (DSI) is a financial ratio that indicates the average time in days
that a company takes to turn its inventory. The data says that GPH LTD has improved in
terms of this ratio.

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 c. Receivable turnover

July 2018-June 2019 July 2017-June 2018 July 2016-June 2017

Sales 13,268,683,927 9,814,101,120 7,955,715,990

Accounts receivable 2505592013.00 1924806359.00 1799922366.00

Receivables 5.30 5.10 4.42

turnover

Accounts receivable turnover is the number of times per year that a business collects its
average accounts receivable. Accounts receivable turned over 5.30 times during the past
year, which means that the average account receivable was collected in 69 days.

d. Day’s sales in receivable

July 2018-June July 2017-June July 2016-June

2019 2018 2017
Days 365 365 365
Receivables Turnover 5.30 5.10 4.42

Day's sale in 68.92 71.59 82.58

Receivables

Days' sales in receivables, measures the number of days it takes a company to collect cash
from its credit sales. It looks like GPH LTD is falling behind in terms of this.

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 e. Total asset turnover

July 2018-June July 2017-June July 2016-June

2019 2018 2017
Sales 13,268,683,927 9,814,101,120 7,955,715,990
Total Asset 31,493,025,039 22,694,238,398 12,866,206,824
Total asset 0.42 0.43 0.62
turnover

The asset turnover ratio measures the efficiency of a company's assets to generate revenue or
sales. This data indicates that the efficiency of GHP LTD has decreased.

f. Capital intensity

July 2018-June July 2017-June July 2016-June

2019 2018 2017
Total Asset 31,493,025,039 22,694,238,398 12,866,206,824
Sales 13,268,683,927 9,814,101,120 7,955,715,990
Capital Intensity 2.37 2.31 1.62

Capital intensity ratio of a company is a measure of the amount of capital needed per taka of
revenue. It looks like that the company needed more capital to generate per taka of revenue
in the past two years.

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 4. Profitability ratios

a. Profit margin

July 2018-June 2019 July 2017-June July 2016-June

2018 2017
Net Income 810,007,598 645,671,220 590,735,969
Sales 13,268,683,927 9,814,101,120 7,955,715,990
Profit Margin 0.06 0.07 0.07

The profit margin ratio compares profit to sales and tells how well the company is handling
its finances overall. It tells that GPH LTD has a stable profit margin.

b. Return on asset

July 2018-June July 2017-June July 2016-June

2019 2018 2017
Net Income 810,007,598 645,671,220 590,735,969
Total Asset 31,493,025,039 22,694,238,398 12,866,206,824
Return on Asset 0.03 0.03 0.05

The return on assets ratio measures how effectively a company can earn a return on its
investment in assets. ROAs over 5% are generally considered good. So, the table says that
GPH LTD has a decreased ROA in last two years which is not a good indicator.

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 c. Return on equity

July 2018-June July 2017-June July 2016-June

2019 2018 2017

Net Income 810,007,598 645,671,220 590,735,969

Total equity 6,335,357,430 5,525,349,832 5,035,603,612
Return on Equity 0.13 0.12 0.12

The return on equity ratio or ROE is a profitability ratio that measures the ability of a firm to
generate profits from its shareholders investments in the company. In other words, the return
on equity ratio shows how much profit each dollar of common stockholders' equity
generates. ROEs of 15-20% are generally considered good. It looks like GPH LTD has a
stable ROE but need to improve to reach the average level.

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 Chapter Seven
Problems Identifications

7.1 Opportunities & Threats

Factors Relative Weigh Score Weighte Opportunit Threats

42Importan t (C) d y (F)
ce (B) Score(D) (E)
(A)
Rating (1- A/∑A (1-10) B*C largest of Largest
10) (D) (A-C)
Social factors
Increased local 8 0.07 8 1 O2 0
demand for the
products
Increased 5 0.04 5 0 0
Dependency
on Real estate
Industry

Economic
factors
Economic 9 0.08 2 0 7 T1
crisis
Low Labor 6 0.05 5 0 1
Rate
Interest rate 8 0.07 3 0 5 T3
and Exchange
Rate
GDP 8 0.07 7 1 O4 1
Unavailability 7 0.06 1 0 6 T2
and Cost of
raw materials

Political
Factors
Govt. Mega 7 0.06 9 1 O3 -2
Project

42 | P a g e
Low pressure 6 0.05 5 0 1
of gas
Power Crisis 6 0.05 6 0 0

Technological
factors
Industrializatio 9 0.08 8 1 O1 1
n and
infrastructural
expansion
Change in 7 0.06 3 0 4 T4
Technology

Competitive
factors
Ability to 7 0.06 7 0 O5 0
expand
production
Potential to 6 0.05 5 0 1
export steel
Increasing no 8 0.07 4 0 4 T5
of competitors
Increasing 5 0.04 6 0 -1
Competitor
production
Capacity
112

7.2 Strengths & weaknesses

Factors Relative Weigh Scor Weighte Strength Weaknesses

importanc t e (C) d s (E) (F)
e (B) Score(D)
(A)
Rating (1- A/∑A (1- B*C largest of Largest (A-
10) 10) (D) C)
1. Highly 8 0.07 8 1 S2 0
skilled
management

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team

2. Short term 5 0.04 5 0 0

liquidity
crisis
3. Inventory 5 0.04 6 0 -1
Turnover
4. Lower 9 0.08 2 0 7 W
Market share 1
5. Satisfying 6 0.05 5 0 1
Annual
Dividends
6. Unskilled 8 0.07 3 0 5 W
Workforce 3
7. Strong 8 0.07 7 0 S4 1
marketing
line up
8. High 7 0.06 1 0 6 W
employee 2
turnover
9. Profit 8 0.07 6 0 2
Margin
10. Own 7 0.06 9 1 S3 -2
Power Plant
11. Earnings 6 0.05 5 0 1
Per Share
12. Debt 6 0.05 6 0 0
Equity Ratio
13. Latest 9 0.08 8 1 S1 1
equipment
and
technology
14. High 7 0.06 3 0 4 W
dependency 4
on supplier
15. Strong 7 0.06 7 0 S5 0
products
distribution
line up

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16. High cost 8 0.07 4 0 4 W
of 5
manufacturin
g
114

7.3 Problems
From the above tables the following problems are seen:
1. This industry is faced with bigger threats from Economic crisis.
2. Unavailability and Cost of raw materials have always created an issues for the
companies in this sector.
3. Interest rate and Exchange Rate fluctuation is major threat to the companies in this
sector as equipment and many other things are purchased from abroad.
4. Bangladesh steel industry has seen introduction many firms in the recent past which
gives increased competition.
5. Lower Market share is problem for GPH LTD.
6. High employee turnover has always been a problem for GPH LTD.
7. Unskilled Workforce is bigger issue and GPH LTD has also faced this problem over
the years.
8. GPH Ispat LTD has a high cost of manufacturing than other bigger player in the
industry.

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 Chapter Eight
Recommendations
8.1 SWOT Matrix
SWOT Matrix Strength
1. Latest equipment and
technology
2. Highly skilled management
team
3. Own Power Plant
4. Strong marketing line up
5. Strong products distribution
line up
Opportunity SO
1. Industrialization and Use latest technology to grab
infrastructural expansion the benefit of govt. policy for
industrialization. (S1, O1)
2. Increased local demand Capitalize new plant and
for the products technology along with
marketing team to capture local
market. (S1,4:O2)
3. Govt. Mega Project Use management team and
distribution line up to be part of
govt. project. (S2.5:O3)
4. GDP Management should use new
plant to grab the chances
brought by incremental GDP.
(S1,2: O5)
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Weakness
1. Lower Market share
2. High employee turnover
3. Unskilled Workforce
4. High dependency on
supplier
5. High cost of
manufacturing
WO
Increase local demand and
Govt. mega project can be
utilized to increase market
share. (W1, O2,3)
Review reward system and
policy while expanding.
(W2, O5)
Provide training to the
workers to meet the
challenges of
industrialization. (W3,O1)
Review suppliers and find
new ones to keep up with the
demand from local and govt.
sector.( W4, O2,3)
5. Ability to expand Capitalize own power plant to
production increase production. (S3.O5)
Threat ST
1. Economic crisis Management and marketing
team should play the upper
hand during economic crisis.
(S2,4:T1)
2. Unavailability and Cost Supply chain dept. always be
of raw materials active to keep the flow of raw
materials. (S2,T2)
3.Interest rate and Top management should play a
Exchange Rate vital role to reduce risk of
fluctuation in currency value
during import of materials and
equipment. (S2,T3)
4. Change in Technology GPH has already reduced that
risk by bringing n the latest
tech.(S1, T4)
5. Increasing no of Marketing team should increase Management must take steps
competitors their effort to stay ahead of the to get ahead of the close
equal level competitors.
(S4,T5)
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Reduce production cost
bringing order from local
and govt. sector. (W5, O2,3)
WT
GPH should take steps to
increase market share in a
way that reduce risk during
economic crisis. (W1,T1)
Reduction of dependency on
limited number of suppliers.
(S2,W4,T2)
Management should be
proactive about importing
required things to reduce
cost of production.
(S2,W5,T3)
GPH has introduced the
latest tech in the country
which will reduce cost than
before. (S1,W5,T4)
competitors and provide
better reward to retain
workers which give
advantage over competitors.
(S2,W3,T5)
8.2 Recommendations to the problems:
1. Management and marketing team should take some pre and post economic crisis
policy to reduce the affect that the company will face during crisis moment.
2. To save from the effect of unavailability of raw materials GPH Ispat LTD may take
measures in a way that it can source from different suppliers or create a plant in
future that will be used to manufacture some valuable raw materials in the country.
3. To reduce the effect of interest rate and currency rate fluctuation the finance
department should play upper hand to import materials or pay interest or take loan.
4. To stay in the competition management team specially the marketing team should
take measures that will produce more sales for them to grow as a big player in future.
5. GPH Ispat LTD intends to increase its market share and they have already set up the
latest factory with latest technology but to reach its goal it needs to hire key persons
or take policy that will go along with its goal.
6. To reduce the high employee turnover GPH Ispat LTD should review their
compensation or reward system.
7. This industry is faced with unskilled labor force problems so GPH Ispat LTD need to
provide training and sometimes arrange some educational programs for the workers.
8. To reduce the cost of manufacturing GPH Ispat LTD should emphasize more on its
operations and supply chain activity.

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 Conclusion
GPH Ispat LTD is one of biggest steel manufacturing companies in Bangladesh. Bangladesh
government aims to reach the next level of development and this industry has a lot to
contribute to the cause. Government puts concentration on infrastructural development
which is a must to reach its promised vision and it gives rise in demand of the products of
this industry. During my project I came to know a great deal about this industry. I tried to
focus on my objectives.

There is no doubt that GPH Ispat LTD has come a long way in this line of business. With
better policy for this sector by govt. company like this can do better. As government focuses
on infrastructural development company like this can help government’s cause. So govt.
should help to grow this type of companies.

As Bangladesh steel industry is self-reliant, govt. along with the companies should look for
opportunities to export products in international market which will add to the earnings of the
foreign currency of Bangladesh.

Good news for the steel companies is that this government is always looking for relaxing
restrictions on industry such as this for better growth of the sector.

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 References

1. Dess, G., Lumpkin, G., Eisher, A., McNamara, G., & Kim, B. (2018). Strategic

Management: Creating Competitive Advantages (6th ed.).

2. GPH Ispat LTD Annual Report 2017, 2018, 2019.

3. Habib, N. (2018). Steel Industry Review.

4. Asrarul Haque, M., & Abdullah, A. (2019). Bangladesh Steel Industry: A

Comprehensive Review.

5. Khan, Y., Ahmed, F., Mahee, S., Tarik, I., & Sadi, A. (2018). The Steel Industry in

Bangladesh: A Strategic Management Coliseum.

6. Moon, I. (2019). Supply Chain Management Practices of Bangladesh Steel

Manufacturing Industry - A Study on BSRM.

7. Rothaermel, F. (2013). Strategic Management: Concepts and Cases (3rd ed.).

8. World Steel Association. (2019). Retrieved 21 May 2020, from

https://www.worldsteel.org

9. The Heritage Foundation. (2019). Retrieved from www.heritage.org

10. Trading Economics. (2019). Retrieved from www.tradingeconomics.com

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