Bangladesh Army University of Science and Technology

Faculty of Business Studies

Department of Business Administration

An Internship Report
on
Financial Performance of BSRM Steels Limited
This Internship report is submitted for the partial fulfillment of the requirement for the degree of
Bachelor of Business Administration (BBA) of Bangladesh Army University of Science and
Technology (BAUST)

Name: Md. Nehal Khan

ID: 180111071
BBA (Major in Finance)
Bangladesh Army University of Science and Technology (BAUST), Saidpur

Semester: Winter, 2022

Date of Submission:

1
 An Internship Report
On
Financial Performance of BSRM Steels Limited

Supervised By:
Mehedi Hasan, Lecturer
Department of Business Administration
Bangladesh Army University of Science and Technology, Saidpur.
Submitted By:
Name: Md. Nehal Khan
ID: 180111071
Program: BBA (Major in Finance)
Bangladesh Army University of Science and Technology, Saidpur.
Submitted To:
Department of Business Administration
Faculty of Business Studies
Bangladesh Army University of Science and Technology

Date of Submission: October 20,2022

2
 Letter of Transmittal
(For the Academic Supervisor)

20 October, 2022 (Date of Submission)

To
Mehedi Hasan
Lecturer
Department of Business Administration
Faculty of Business Studies
Bangladesh Army University of Science and Technology

Subject: Submission of Internship Report on " Financial Performance of BSRM Steels

Limited."
Dear Sir,
With due respect, it is stated that I am submitting my internship report on “BSRM Steels
Limited: A Study on Saidpur Branch”, which has been prepared as per requirement for obtaining
the degree of Bachelor of Business Administration (BBA) offered by Bangladesh Army
University of Science and Technology, Saidpur, Bangladesh. It was a pleasure experience on my
part to go through the process that reaffirms my classroom knowledge into practice. Despite my
insufficient knowledge, I hope the internship report has attained its purpose to a considerable
extent.
Please find enclosed here with one copy of internship report for your perusal and kind consideration. It
will be pleasure to me if you kindly accept my Internship report.
Thanking you for your valuable advice and co-operation.

Sincerely yours.

Md. Nehal Khan

ID No.: 180111071
BBA (Major in Finance)
Department of Business Administration
Bangladesh Army University of Science and Technology
Saidpur, Bangladesh

3
 Supervisor’s Approval

It is my immense pleasure to certify that Nehal Khan bearing ID: 180111071 student of Bachelor
of Business Administration of Bangladesh Army University of Science and Technology,
Saidpur, has successfully completed the internship report entitled “Financial Performance of
BSRM Steels Limited”

It is her own performance, not joined work and she has completed this work under my direct
supervision and guidance. I also certify no part of this report has been submitted for the award of
any other degree, diploma, fellowship or any other similar titles or prizes and the work has not
been published in any journal or magazine.

I also certify that I have gone through the report thoroughly and found it satisfactory for
submission to Bangladesh Army University of Science and Technology, Saidpur, in fulfillment
of the requirements for the Bachelor of Business Administration.

Supervisor

……………..

Mehedi Hasan, Lecturer

Department of Business Administration
Bangladesh Army University of Science and Technology,
Saidpur.

4
 Acknowledgement

I am grateful to many individuals for the completion of the report successfully.

First of all, I would like to offer my heartiest thanks to Almighty to complete my internship
period and to prepare this report without facing noteworthy trouble.
Then, I would like to take the opportunity to express my heartfelt gratitude to my honorable
supervisor, Md. Mehedi Hasan, Lecturer, Department of Business Administration, Bangladesh
Army University of Science and Technology, Saidpur for his expert supervision, constant
guidance, and inspiration during the preparation of the report.
I am very much indebted to the Group CFO & Company Secretary of BSRM group Mr. Shekhar
Ranjan Kar FCA, and the Head of Finance & Accounts Mr. Reazul Kabir FCA to give
permission to do internship in the corporate head office of BSRM Group, who helped me a lot by
providing all the necessary internal information about BSRM Steels Limited. Furthermore, I
want to thank all the concerning officials of the organization for furnishing me with all the vital
information and advice.
I am also thankful to my peer colleagues for providing important documents and their supports,
which has helped me a lot in preparing this report. I am heartily apologizing of any omitted name
whose contribution was also complimentary for any possible aspect.

There might be some mistakes for my limited knowledge and scarcity of time though I had no
lack of wish to do that, I hope that readers of this report will consider it with kind heart.

………………...

Md. Nehal Khan

ID No.: 180111071
BBA (Major in Finance)
Department of Business Administration
Bangladesh Army University of Science and Technology

5
Saidpur, Bangladesh

Executive Summary

This Internship report contains the evidence and assessment of financial performance required by
a company. So, this paper will facilitate the audiences to understand the basic concept of
financial performance, its major features, importance and scopes, and how Bangladeshi
companies are dealing with the financial condition.

The main objective is to match the students’ academic knowledge with the real example. The
methodology used here is very simple and it represents theoretical and some mathematical data.

Steel industry is proved as a promising industry in the global economy. Bangladesh is

developing day by day and showing its existence in the global market. As a token of
development, steel industry of Bangladesh is also moving forward. Several companies are trying
to establish in the steel industry for the betterment of themselves and that of the country.

A company’s financial statements provide various financial information that investors and
creditors use to evaluate a company’s financial performance. Financial statements are also
important to a company’s managers because by publishing financial statements, management can
communicate with interested outside parties about its accomplishment running the company.
Different financial statements focus on different areas of financial performances.

As capital providers, investors and creditors rely on a company’s financial conditions for both
the safety and profitability of their investments. More specifically, investors and creditors need
to know where their money went and where it is now. The financial statement of balance sheet
addresses such issues by providing detailed information about a company’s asset investments.

The report is based on studying the BSRM Steels Limited. This company is an example of
sustainable investment made in Bangladesh by the BSRM Group to reduce the demand supply
gap of MS Rod. This internship report shows how financial performance is evaluated and
managed to operate the regular activities of the company for sustaining in the industry.

6
 Table of Contents
Contents Pa
ge
N
o
Letter of Transmittal……………………………………………………………………….
01

Supervisor’s Approval…………………………………………………………….
02
Acknowledgement…………………………………………………………………………
03

Executive Summary ……………………………………………………………………….

04

Chapter One: Background of the study

1.1 Introduction …………………………………………………………………………. 10

1.2 Objectives of the Study………………………………………………………………. 10

1.3 Scope of the Study…………………………………………………………………… 11

1.4 Methodology…………………………………………………………………………. 11

1.5 Limitations…………………………………………………………………………… 12

Chapter Two: An Overview of BSRM Steels Limited

2.1 Company profile……………………………………………………….……………... 13

2.2 Mission of BSRM……………………………………………………………………… 14

2.3 Vision of BSRM ………………………………………………………………………. 14

2.4 Code of conduct ……………………………………………………………………. 14

2.5 Corporate Structure ………………………………………………………………… 15

2.6 The Rolling Process …………………………………………………………………. 16

7
 Chapter Three: Product Information
3.1 Products……………………………………………………………………………. 17

3.2 Company competitive situation ……………………………………………………. 20

3.3 Distribution of Product/Services ……………………………………………………. 21

Chapter Four: Financial Performance

4.1 Financial performance ……………………………………………………… 22

4.2 Liquidity ratios ……………………………………………………………… 22

4.3 Profitability ratios …………………………………………………………… 23

4.4 Efficiency ratios……………………………………………………………… 24

4.5 Solvency ratios………………………………………………………………. 25

4.6 Market Performance ratios…………………………………………………… 25

4.7 SWOT Analysis……………………………………………………………… 25

Chapter Five: Findings, Recommendations and Conclusion

5.1 Summary of findings & their recommendations ………………………………………. 27

5.2 Conclusion ………….…………………………………………………………………. 28

5.3 Reference ..………………….…………………………………………………………. 29

  Bibliography

  Appendix

8
Specific writing instruction is given in the below under the heading of each chapter.

Chapter One: Introduction

(Include the scope of your study emphasizing on the necessity of internship, objectives, methodology and
limitation of the study).

Chapter Two: An Overview of BSRM Steels Limited

(Include Company profile, Mission of BSRM, Vision of BSRM, Code of conduct, Corporate Structure,
The Rolling Process, Distribution of Product/Services).

Chapter Three: Product Information

(Include All Types of Products, Company competitive situation, Distribution of Product/Services)

Chapter Four: Financial Performance

(Financial performance, Liquidity ratios, Profitability ratios, Efficiency ratios, Solvency ratios, Market
Performance ratios, SWOT Analysis)

Chapter Five: Findings, Recommendations and Conclusion

(Summary of findings & their recommendations, Conclusion).

Appendix-1
Appendix-2

9
 CHAPTER 1
Background of the Study

1.1 Introduction
In Bangladesh Steel Industry is one of the most developed hi-tech sector which is contribute to
the growth of the country through stimulating trade and commerce, accelerating the pace of
industrialization, boosting up export, creating employment opportunity for the youth, poverty
alleviation, raising standard of living of limited income group and overall sustainable socio
economic development of the country.

After the boost of housing industry along with the rise of modern era in Bangladesh - the
development of this sector was accelerated. The professional knowledge, thoughts and
innovative ideas of the steel workers in this sector are the key factors of these developments.
Leading steel manufacturing Companies are expanding their business with the aim to export
market.

BSRM Steel products have been chosen solely for building major National landmarks and
infrastructures. To name a few, the Hatirjheel Project, Zillur Rahman flyover, Mayor Hanif
Flyover, Shah amanat Bridge were made with BSRM Xtreme.

BSRM Xtreme is a product that was introduced when there were no graded steel. It was major
change in the steel industry. The core driver was the belief in evolution in steel products, which
resulted in bringing the first EMF tested rod, the first steel brand that passed 5 million cyclic
loading Fatigue testing in the U.K and conformed to 10 Global standards. With the largest steel
producing factory in the country and employing the best technology from Europe, the company
maintains volume with uncompromising quality. BSRM is dedicated to providing the best
solution for the construction industry. The first ever 50 mm Rod was specially designed and
rolled for the deep pilling requirements of Padma Bridge. Its recently introduced brands are also
designed to meet special needs for the construction industry.

1.2 Objective of the study

Main Objective:

10
 The main objective of the study is to know the financial performance & Risk
management of BSRM Steels Limited. (BSRMS)

Specific Objectives:
o To have an overview of BSRMS.
o To analyze the financial performance of the company.
o To identify risk factors that may impede performance & growth of the company.
o To provide possible solution for the management of risky factors of BSRMS.
o Having an overview of recent performance of the company.
o Providing suggestions and recommendation for maintaining profitability &
growth of the company.

1.3 Scope of the Study

As I have worked only in Accounts & Finance division in BSRM Steels Limited, BSRM
Corporate Office, Ali mansion, Sadarghat Branch. This report only includes the Risk
management and financial performance under Finance & Accounts department of BSRM. This
report does not include Human resource management of BSRMS. Besides this report does not
include the Human resource management, Supply chain or Manufacturing of BSRMS.

1.4 Methodology of the study

In order to make a meaningful report the data are collected through primary and secondary way.

Primary Sources:

o Personal Interview.
o Observation in the organization.
o M, Practical task desk.

Secondary sources:

o Website of Bangladesh Steel Re-Rolling Mills Limited (www.bsrm.com )

o Annual Reports of BSRM Steels Limited.
o Company’s Financial Statements
o Different types of sheet compiled by Company officer.
o Analysis and evaluation of the findings.

The collected data and information have been tabulated, processed and graphically presented in
order to make the study more informative and useful.

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1.5 Limitations of the study
Though I have given utmost effort to prepare this report but there are some limitations of the
study which are as follows-

o Work load during the internship program at the work place was also a barrier to
prepare this report.

o Time is the main limitation for my study. Due to unavailability of sufficient time,
it is not possible for me to provide all up-to-date information.

o Current and adequate information was hard to collect.

o Due to lack of practical experience, some errors might be occurred during the
study. Therefore, maximum efforts have given to avoid mistakes.

o As a novice it was tough for me to make evaluation and finally draw

recommendations. The allotted time is not enough to understand and evaluate this
type of vast issue.

o Last but not the least; a good study requires the analysis of as much data as
possible covering various aspects of the study. There may be some lacking and I
hope to be excused for these.

12
 CHAPTER 2
Overview of BSRM Steels Limited
2.1 Company Profile
Background
Bangladesh Steel Re-Rolling Mills Limited , a high grade steel manufacturing company
has been operating as the sister concern of BSRML is considered as one of the oldest Steel
manufacturing plants in the country that started business in 1960. Product line of the company
includes MS Rod, channel and Angle etc. At present, the company is running with the production
capacity of 120000 Metric Ton per annum. BSRML was incorporated on December 28, 1960 as
a private limited company and converted into a public limited company on November 03, 2009
under the company’s act 1994. Subsequently on January 01, 2011, BSRML has merged with its
backward linkage sister concern Meghna engineering works limited. The paid up capital of
BSRML stood at Tk. 1558.51 million against the authorized capital of Tk. 5000.00 million as on
December 31, 2013. Currently BSRML is undergoing a Balancing Modernization Rehabilitation
and Expansion (BMRE) program to enhance its annual capacity of 1100000 MT. The plants are
located at 147-149, Nasirabad I/A, Baizid Bostami Road, Chittagong and 78-79 Nasirabad
industrial area, Chittagong with its corporate office at Ali Mansion, Sadarghat Road, Chittagong.

Group Profile
Since the beginning of its journey in 1952, Bangladesh Steel Re-Rolling Mills (BSRM) Group of
Companies becomes the market leader in the steel manufacturing industry of Bangladesh. This
group has a wide and glorious history of serving the nation through its best quality and cost-
effective products. It produces high-strength reinforced steel under the name of Xtreme500. This
product ensures 10 global standards and the bestselling brand available in the country. This
group expanded its business by adopting new technology from European mill in 1987. Now this
group of companies has several business operations like steel re-rolling mill, production of MS
Rod, billet casting project, etc.

BSRM Steels Limited (BSRMSL), an associate company of BSRM Group, plays as a dominant
player in the steel industry. They became the best steel manufacturing company of Bangladesh
by maintain the quality of the product throughout the production process. The company enjoys a

13
good and timely financing by banks because of its sound credibility. This paper shows the
financial performance of the company through some theoretical and mathematical analysis.

2.2 Mission of BSRM Group

Create products and services valued by our customers; constantly improving our processes
through innovation and adopting best practices; reducing wastage; minimizing costs; investing in
systems and technology and developing our people to build a highly capable workforce.

2.3 Vision of BSRM Group

BSRMS group aspire to

o Maintain our leadership position in the steel industry by producing the best quality steel
products, continuously enhancing customer satisfaction and becoming a reliable business
partner of our customers and suppliers.
o Be an employer of choice, with focus on nurturing talent and developing future leaders of
the organization.
o Protect the interest of our shareholder through sustainable growth and value creation.
o Preserve the trust of all our stakeholders by adopting ethical business practices.
o Support the society through corporate social responsibility initiatives.

2.4 Code of Conduct

o BSRM always adopts best ethical and transparent business practices to be fair and honest
in all its dealings.

o We always acknowledge and fulfill our obligations towards the society and offer our best
services to our customers and treat them with respect and honor.

14
2.5 Corporate Structure

15
 Board of
Directors

Audit
committee

Managing Director Director (Finance) Group CFO &

Company
Secretary

Executive Director Head of Dhaka

Corporate affairs
Head of Finance &
Accounts and CFO
Country Director
National Sales Head
Kolkata India

Head of marketing
Head of Supply
and product
Chain
development

Head of
Administration Plant Head

Head of HR

Head of IT

Head of Internal Audit

Head of Technical
projects

Head of CSR

2.6 The Rolling Process

16
The rolling process used by the factory may be presented as under:

Use of Quality Continuous Cast or Rolled Billets

Charging of Billet in Furnace

Billet re-heated in the 75 tph Pusher type furnace

Discharging from the furnace

Roller Table with Emergency Collecting Pockets

Pinch Roll

Rolling in the Roughing Mill

Crop Crank Shear

Rolling in the Pre-finishing Mill

Crop Shear

Rolling in the Finishing Mill

Finishing Mill

Water Box for Bar Quenching- QTB system

Cut in Multiple Length of Bars at Dividing Shear

Cooling Bed and Services

Static Cold Cutting-to-Length Services with Shear

Bundling Station

Tying Station

Weighing Station

Collecting Pockets

17
 CHAPTER 3
Product Information
3.1 Products
BSRM is country’s first producer of 500 MPa yield strength re-bar, branded and marketed as
Xtreme 500W, proving BSRM’s quest for continuous innovation as nation building partner.
Beside re-bar production, BSRM rolls and markets sectional steels such as angles and channels
and ribbed wire which are manufactured in separate plants of BSRM. The bars, specially Xtreme
500 W and sectional products ranging in various sizes conforming to ISO 6935-2:2015 and ISO
630-3:2012(E) respectively which are the lawful standard of the country. BSRM’s steel products
are inside Buildings, Bridges, and National Infrastructures all of which are made to
internationally accepted construction codes. The codes in turn specify engineering materials
conforming to various global standards.

I. Xtreme
II. Maxima
III. Ultima
IV. Xtrong
V. Centura

Xtreme
Xtreme is a high strength reinforcing steel for general purpose construction of low and medium
rise commercial and residential buildings and bridges. It is the steel of choice among home
builders. It is used in the design and construction of Ordinary and Intermediate moment frames
of reinforce concrete (RC) Buildings, whenever high strength for economy and high ductility for
safety is required.

The most common sizes for home builders are 8mm, 10mm, 12mm, 16mm, and 20mm. These
sizes are available with BSRM appointed dealers throughout the country. BSRM has the largest
steel dealer network, with over 628 Dealers in all the 7 administrative divisions of the country.
Larger diameters, 25mm, 32mm and 40mm are also available for use in the construction of very
tall buildings [25 story and beyond], Bridges and flyovers.

18
BSRM created history by becoming the only steel producer, in the Indian sub-continent; to roll
50mm rebar. The 50mm Bar was used in the pile foundation of the Padma Bridge.

Maxima

Steel is a ubiquitous and versatile construction material. It is the backbone of a nation’s

infrastructure and used in the tens of millions of tons to build cities, bridges, and factories. It is
either used as a structural material or as a composite in reinforced concrete (RC).

RC is usually the preferred construction method, in Bangladesh, due to its low cost and relatively
cheap labor cost, in the country. Most public infrastructure in the country such as bridges and
flyovers and transportation hubs, ports, airports, railway stations are built on RC. So are
commercial and residential buildings. Concrete reinforcing steel bars, or rebar in short, are used
in tens of millions of tons for RC construction. The use of Grade 80 rebar instead of Grade 60
reduces steel consumption up to 25% in RC structures.

Steel is also, the most costly construction material; any reduction in steel consumption has
immense appeal for private developers and builders. For planners and economists the appeal is
even higher as Life Cycle Costs of Infrastructure can be substantially reduced.

BSRM Maxima is exactly the material for construction of projects which needs extra strength
combined with an extra dose of safety. It has Yield strength exceeding 80,000 psi [550MPa]
combined with Tensile strength exceeding 105,000 psi [725MPa]. It has fantastic elongation
exceeding 16%, in all sizes.

BSRM Maxima is the perfect material which requires Strength and Safety in the same breath.
Nuclear power stations and large river crossing Bridges are perfect examples where BSRM
Maxima can be used.

BSRM Maxima has undergone successful production in BSRM Steels Ltd. and extensive testing
in Bangladesh University Engineering Technology (BUET) Dept. of Civil Engineering.

Ultima
The Bangladesh National Building Code (BNBC) 2015 and the American Concrete Institute
(ACI) 2014 state” Buildings in earthquake prone areas should be built on Special Moment
Frames (SMF). The BNBC and ACI further state that special Moment Frames (SMF) should be
reinforced with high ‘strain hardening’ steel.

All vital installations anywhere in the country like hospitals, schools, airports, railway stations
and bridges cannot be allowed to fail in an earthquake. They have to be reinforced with ‘strain
hardening’ steel and designed with special moments frames as per the guidelines of the
Bangladesh National Building Code (BNBC).

19
Further any type of structure, commercial or residential, in Zone –IV which encompasses Sylhet
and Mymensingh in the Bangladesh National Building Code (BNBC) needs to be reinforced with
‘strain hardening’ steel and designed with special moment frames.

Strain hardening steel requires additional stress beyond its yield strength to produce additional
plastic deformation and the steel becomes stronger and more difficult to break.

In a landmark innovation BSRM brings forth BSRM ULTIMA the reinforcing steel with the
unique ‘strain hardening’ property for the first time in the country.

BSRM ULTIMA conforms to the U.S. national reinforcing steel standard ASTM A-706 Grade
60 and ISO 6935-2 Grade 420 and recognized by the American Concrete Institute (ACI) of 2014
and the Bangladesh National Building Code (BNBC) of 2015.

Xtrong

Xtrong is a high strength structural steel conforming to ASTM 572 Grade 50 and ISO 630 Grade
345 Channels and Angles section rolled out of this high strength steel provides an economical
alternative to steel fabricated structures compared to traditional ASTM A-36 steel. Structures
made out of Xtrong or Grade 50 steel requires 18% to 25 % less steel compared to Grade 36
steel.

Centura

Corrosion induced failures causes severe distress to concrete structures is most common in any
chemically aggressive environments. Repair and rehabilitation of the affected structures not only
cost the exchequer with direct and indirect costs but also cause lot of inconvenience to the
public. Hence, it is essential to plan proper corrosion protection strategy to combat corrosion for
the durability of structures particularly in marine, coastal or industrially polluted areas.

Fusion Bonded Epoxy (FBE) Coating is able to provide protection against corrosion for the
design life of the structures. It is to be noted that there is no comparable technology for over 45
years in actual service conditions in the most demanding environments in the world.

Today more than one million structures across the world stand in testimony to the long term
performance of FBE Coated Rebar. Around I5% of total rebar’s used in USA is FBE Coated
Rebar. And it is used in other ports of the world including Asia.

Technology introduced in India in 1990 there are several thousand structures across India,
particularly in the coastal areas. This proves the efficacy of the FBE Coating to prevent corrosion
in concrete structures. Application include highway and railway bridges, water storage &
treatment and waste water treatments facilities, refineries, fertilizer plants, jetties and marine
works, power plants, nuclear facilities, tunnels, reservoirs, multi story buildings, et al.

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3.2 Company competitive situation
Steel consumption increases when economies are growing, as governments invest in
infrastructure and transport, and build new factories and houses.

Bangladesh is a developing country where GDP growth for last 3 years was around 6%. Due to
increasing income level of the people of Bangladesh, government as well as individual has given
priorities on the social comfort. That is why real estate and infrastructural sectors are improving
day by day. To improve the social life of the people, the government has also taken various
infrastructural projects viz. several flyovers in Dhaka & Chittagong including Dhaka Elevated
Expressway, Dhaka-Chittagong 4-lane project including its bridges and culverts, Saidabad water
Treatment plant projects. All these projects require huge quantity of MS Re-Bars.

The Biggest opportunity for Bangladesh Steel Sector is that there is enormous scope for
increasing consumption of steel in almost all the sectors in Bangladesh.

Bangladesh has around 300 Steel producing factories where 200 are re-rolling mills. Except for a
few, most of them uses crude technology resulting in low-quality steel and mostly based on ship
plates derived from ship breaking industry is in a crisis because of its pollution standard and may
be restricted any time, in which case there will be a huge demand for quality steel in the country.

Many reports and papers have been prepared estimating the annual demand of steel and annual
demand for quality rod in the country. Exact year to year figures are not available. Bangladesh’s
annual demand for quality rod is estimated at more than 2.5 million MT, where country usually
consumes over 1.7 million tones of MS road or 70 per cent of its annual demand in the peak
season. The expected growth rate is approximately 10%

Chittagong Based BSRM Steels Group is the market leader in the steel sector. Other main
competitors are Abul Khair Steels limited (AKS), Kabir Steel Re-Rolling Mills Limited
(KSRML), Seema Steel Re-Rolling Mills Limited (Seema), Rahim Steel Mills Limited (RSML),
GPH Ispat Limited (GPH), Ratanpur Steels Limited, Baizid Steel, Anwar Ispat limited who are
producing about 30% of total quality steel demand of Bangladesh.

21
3.3 Distribution of Product/Services

Factory

Dealer Retailer End User

Wholesaler End User

Retailer

End User

BSRM Steels Limited has its own distribution channel all over the country. Moreover, it is
continuously expanding its distribution network. It has around 650 authorized dealers to sell its
products to the end users. Apart from this Bangladesh steel Re –rolling Mills Limited have own
sales and customer service offices in 10 districts including Dhaka, Sylhet, Comilla, Bogra,
Rangpur, Rajshahi, Khulna, Barishal, Narayanganj to ensure prompt supply of its products to the
customers along with dedicated & quality services. Since it is spread out in so many areas, there
are special geographical advantages. It can reach out to potential customers all over the country,
thus increasing chances of sales compared to its competitors, who have not managed to reach out
their services in the similar way. Same channel is used for all BSRM products.

22
 CHAPTER 4
Financial Performance

4.1 Financial performance

Financial performance analysis is a subjective measure of how well a firm can use assets from its
primary mode of business and generate revenues. This term is also used as a general measure of
a firm's overall financial health over a given period of time, and can be used to compare similar
firms across the same industry or to compare industries or sectors in aggregation.

One of the most fundamental facts about businesses is that the operating performance of the firm
shapes its financial structure. It is also true that the financial situation of the firm can also
determine its operating performance.

Financial statement analysis is a judgmental process. One of the primary objectives is

identification of major changes in trends, and relationships and the investigation of the reasons
underlying those changes. The judgment process can be improved by experience and the use of
analytical tools. Probably the most widely used financial analysis technique is ratio analysis, the
analysis of relationships between two or more line items on the financial statement. Financial
ratios are usually expressed in percentage or times. Generally, financial ratios are calculated for
the purpose of evaluating aspects of a company's operations and they fall into the following
categories:

4.2 Liquidity ratios

Liquidity ratios are the ratios that measure the ability of a company to meet its short term debt
obligations. These ratios measure the ability of a company to pay off its short-term liabilities
when they fall due.
The liquidity ratios are a result of dividing cash and other liquid assets by the short term
borrowings and current liabilities. They show the number of times the short term debt obligations
are covered by the cash and liquid assets. If the value is greater than 1, it means the short term
obligations are fully covered.
Generally, the higher the liquidity ratios are, the higher the margin of safety that the company
possesses to meet its current liabilities. Liquidity ratios greater than 1 indicate that the company
is in good financial health and it is less likely fall into financial difficulties.

23
Most common examples of liquidity ratios include current ratio, acid test ratio (also known as
quick ratio), cash ratio and working capital ratio. Different assets are considered to be relevant
by different analysts. Some analysts consider only the cash and cash equivalents as relevant
assets because they are most likely to be used to meet short term liabilities in an emergency.
Some analysts consider the debtors and trade receivables as relevant assets in addition to cash
and cash equivalents. The value of inventory is also considered relevant asset for calculations of
liquidity ratios by some analysts.
The concept of cash cycle is also important for better understanding of liquidity ratios. The cash
continuously cycles through the operations of a company. A company’s cash is usually tied up in
the finished goods, the raw materials, and trade debtors. It is not until the inventory is sold, sales
invoices raised, and the debtors’ make payments that the company receives cash. The cash tied
up in the cash cycle is known as working capital, and liquidity ratios try to measure the balance
between current assets and current liabilities.
A company must possess the ability to release cash from cash cycle to meet its financial
obligations when the creditors seek payment. In other words, a company should possess the
ability to translate its short term assets into cash. The liquidity ratios attempt to measure this
ability of a company.
We can use several types of ratios to monitor liquidity. But the most common are Current ratio
and Acid test ratio.

4.3 Profitability ratios 

Profitability ratios measure a company’s ability to generate earnings relative to sales, assets and
equity. These ratios assess the ability of a company to generate earnings, profits and cash flows
relative to relative to some metric, often the amount of money invested. They highlight how
effectively the profitability of a company is being managed.
Common examples of profitability ratios include return on sales, return on investment, return on
equity, return on capital employed (ROCE), cash return on capital invested (CROCI), gross
profit margin and net profit margin. All of these ratios indicate how well a company is
performing at generating profits or revenues relative to a certain metric.

24
Different profitability ratios provide different useful insights into the financial health and
performance of a company. For example, gross profit and net profit ratios tell how well the
company is managing its expenses. Return on capital employed (ROCE) tells how well the
company is using capital employed to generate returns. Return on investment tells whether the
company is generating enough profits for its shareholders.
For most of these ratios, a higher value is desirable. A higher value means that the company is
doing well and it is good at generating profits, revenues and cash flows. Profitability ratios are of
little value in isolation. They give meaningful information only when they are analyzed in
comparison to competitors or compared to the ratios in previous periods. Therefore, trend
analysis and industry analysis is required to draw meaningful conclusions about the profitability
of a company.
We can use several types of ratios to monitor liquidity. But the most common are Gross Profit
Margin, Net Profit Margin, Return on Assets, Return on Equity and EPS.

4.4 Efficiency ratios

Efficiency ratios also called activity ratios measure how well companies utilize their assets to
generate income. Efficiency ratios often look at the time it takes companies to collect cash from
customer or the time it takes companies to convert inventory into cash—in other words, make
sales. These ratios are used by management to help improve the company as well as outside
investors and creditors looking at the operations of profitability of the company.

Efficiency ratios go hand in hand with profitability ratios. Most often when companies are
efficient with their resources, they become profitable. Wal-Mart is a good example. Wal-Mart is
extremely good at selling low margin products at high volumes. In other words, they are efficient
at turning their assets. Even though they don't make much profit per sale, they make a ton of
sales. Each little sale adds up. Here is the most common efficiency ratios include: Accounts
Receivable Turnover, Working Capital Ratio, Asset Turnover Ratio, Total Asset Turnover Ratio,
Inventory Turnover and Days' sales in Inventory.

4.5 Solvency ratios

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Solvency ratios, also called leverage ratios, measure a company's ability to sustain operations
indefinitely by comparing debt levels with equity, assets, and earnings. In other words, solvency
ratios identify going concern issues and a firm's ability to pay its bills in the long term. Many
people confuse solvency ratios with liquidity ratios. Although they both measure the ability of a
company to pay off its obligations, solvency ratios focus more on the long-term sustainability of
a company instead of the current liability payments.

Solvency ratios show a company's ability to make payments and pay off its long-term obligations
to creditors, bondholders, and banks. Better solvency ratios indicate a more creditworthy and
financially sound company in the long-term.

4.6 Market Performance ratios

Market Performance ratios are used to compare publicly traded companies' stock prices with
other financial measures like earnings and dividend rates. Investors use market performance
ratios to analyze stock price trends and help figure out a stock's current and future market value.
In other words, market performance ratios show investors what they should expect to receive
from their investment. They might receive future dividends, earnings, or just an appreciated
stock value. These ratios are helpful for investors to predict how many stock prices will be in the
future based on current earnings and dividend measurements.

4.7 SWOT Analysis of BSRM Steel

SWOT Analysis means Strengths, Weaknesses, Opportunities & Threats of aparticular company.
Strengths are the advantages coming from the internalbusiness environment. Weaknesses are the
internal bottlenecks. Opportunitiesindicate privileges that come from the external business
environment wherethreats mark the external environmental disadvantages.

Strength

o Quality Product
o Capable management 
o Great competitive skills 
o Reliability
o Qualified & experienced manpower 
o Strong employee bonding and belongingness 
o Attractive remuneration package 
o Adequate capitalization 

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 o Extremely rapid growth , high quality products & production level also high 
o Strong Marketing Line up 
o Strong Products Distribution Line up 
o Provides quick & prompt services to its customers
o Reliable & permanent buyers 
o Satisfactory report on compliance issues by the buyers

Weakness 

o Location of Corporate Office is not situated in a renowned area 

o Not sufficient transportation facilities both the employees & workers 
o Ensure more logistics supports

Opportunity

o Provides contributory Provident Fund (PF) for the employees 

o Excellent increment facilities 
o Attractive remuneration 
o Good reputation of the company among the others company 
o Gathering & developing career by working with qualified & experienced employees 
o Good Working Environment

Threats

o There are many competitors in the market 

o Government imposes VAT & Tax on profit highly 
o Government imposes new conditions for services which makes complexsituation
o Political crisis

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 CHAPTER 5
Findings, Analysis,
Recommendations and
conclusion
5.1 Summary of findings & their recommendations:
Now in this competitive world, the competition is fierce and the economy is also becoming more
volatile. So BSRM Steels Ltd. should work hard to hold its position in the industry. So, the
financial performance I .e. Liquidity, Profitability, & Efficiency should be improved in order to
hold its position.

From the above analysis, we can come to conclusion about the ratios.

Firstly, the Liquidity ratio which includes current and acid test ratio. Current ratio over the
period is in an improving condition, though it couldn’t still reach the standard current ratio. Acid
test ratio over the period is showing fluctuation, this means BSRMS is less liquid, in converting
its current assets into cash. So, it may face liquidity problem in terms of cash needed.

To improve the liquidity condition, BSRMS can-

o Monitor accounts receivables effectively to ensure that BSRMS is billing their

clients properly and whether they are receiving prompt payments.

o Negotiate longer payment terms with the vendors whenever possible to keep
BSRMS money Longer.

o Get rid of unproductive assets that BSRMS is just storing. The only reason it
should spend money on assets such as buildings, equipment and vehicles is to
generate revenue.

Secondly, the Profitability ratio; Gross profit margin is showing a positive figure but for four
consecutive years it kept on falling. The Net profit margin is quite uncertain, it doesn’t have any
consistency but it is always above 2%. ROA is showing positive figure over the six years, though
the trend is not an improving one, it is varying year to year. ROE is in very critical condition

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over the last five years. It dropped drastically in 2010 and couldn’t recover it; from then on the
trend is showing a downfall in each and every year. Next, the EPS is in a healthy position over
the years. So, profitability condition attracts the investors or else they may switch off to other
company and this may hamper the goodwill of BSRMS.

To improve the profitability condition, BSRMS can-

o Have close management of their costs can drive its profitability but not at the
expense of the quality of its products.

o As the competition is getting hard, the company should focus on the pricing of the
product.

o One of the most obvious routes to increase profitability is to buy more effectively.
Review the supplier base regularly and see if it can buy the same raw materials
more cheaply or efficiently.

Thirdly, the Efficiency ratio; Inventory turnover ratio varied in the years whereas total asset
turnover maintained its consistency throughout the period. More efficient management of
inventory will lead to more sales.

To improve the efficiency condition, BSRMS can-

o Set a better overall price for the products to increase demand, which in turn boosts
sales and inventory turnover.

o Call distributors to seek a better price for the products or materials you buy, to
reduce your inventory investment.

o Increase Revenue to improve asset turnover ratio. The assets might be properly
utilized, but the sales could be slow resulting in a low asset turnover ratio. The
company needs to increase its sales by more promotions and by quick movements
of the finished goods.

o Make better inventory Management, the company needs to check its inventory
management to figure out the time spent in the movement of the goods throughout
the process. If the company’s delivery system is slow, there will be delays in
getting the product to the customer and collecting the payment on time.

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Fourthly, the Solvency ratio is very satisfactory, the entire ratio is improving (debt to equity,
interest coverage and equity ratio). Better solvency ratios, indicates that BSRMS is more
creditworthy and financially sound company in the long-term.

To improve the solvency condition, BSRMS can-

o Though BSRM Steels is in the position of sound solvency but the term “risk” is
involved in every term. So Accounts & Finance Department should be alert , the
management department should operate their functions and operation
considering their present position, their competitors and what they actually
deserve and last of all what will be their upcoming position in market.

Finally, the Market performance ratio; Price earnings ratio is good enough but dividend
payout ratio is falling very slowly. So, the market condition of BSRMS is not too bad, it is
satisfactory enough.

To improve the Market condition, BSRMS can-

o BSRMS should improve relationship with their dealers this will help in future a
lot to expand their scope in the market.

o They can expand their marketing area like advertising; this will ensure good
better output.

5.2 Conclusion
Most of the steel Industry in Bangladesh is offering a wide array of financial services including
trade and commerce and some whole new services are being launched every year. BSRM Steels
Ltd, a company of difference, also has discovered new avenues to reach its goals. For the Brand
name, BSRM Steels producing the best quality steel products, continuously enhancing customer
satisfaction and becoming a reliable business partner of their Customers and Suppliers.

BSRMS should take extraordinary decision and diversify its management & HR so that in near
future when competition among Steels Company will serve, it can stand with its own identity.

Decisions method that may seem fit today may not work tomorrow. So all the Financial
Institutions must find their own method in order to sustain in the changing world. Central focus
in this regard would be to have a comprehensive Information Technology system, sufficient
expertise and above all very relaxed management to adopt new idea to update decisions
techniques and HR methods.

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Now BSRM Steels Ltd. is continuing its business operational growth through business
innovation successfully in Bangladesh through developing an image and goodwill among its
clientele by offering its excellent services. The success has been resulted from the dedication,
commitment, and dynamic leadership of its management. BSRMS has successfully grabbed a
strong position as a highly progressive and dynamic financial institution among the other steels
company in Bangladesh.

5.3 Reference Books

o Ray H. Garrison, Eric W. Noreen; (2013-2014); Managerial Accounting; Mc Graw-
Hilll Irwin
o Stephen A. Ross, Randolph W. Westerfield and Jeffrey Jaffe; (2011-2012); Corporate
Finance; Mc Graw-Hilll Irwin
o Financial Performance by Rory Knight & Marc Bertoneche
o Jay Way (nd) The Importance of a Company's Financial Statements – Demand media

Websites
o Steel Industry in Bangladesh, Wikipedia retrieved from
http://en.wikipedia.org/wiki
o History of BSRM Steels Limited, retrieved from
http://www.bsrm.com/financialinfo.com
o Steel maker plans big; (2011, 19thJanuary); The Daily Star, retrieved from
http://archive.thedailystar.net/newDesign/news-details.php?nid=170582
o BSRM Group (August, 2014). “Vision, Value, Group Profile.” History.
http://www.bsrm.com/

o Hasan Bazmi Bangladesh steel market, retrieved from

http://www.scribd.com/doc/167359538/Bangladesh-Steel-Market
o Financial ratios meaning, http://www.readyratio.com

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