BBA Assignment

For Business Finance

(Fin201)

Critical analysis on the use of financial statements in assessing the

performance of Confidence Cement Limited

Prepared for
Leo Vashkor Dewri
Senior Lecturer
Department of Business Administration

Submitted by
Group A
Section: 03

Name ID
Aysha Akter 2016-1-10-132
MD. Asif Ali 2017-2-10-229
Gopal Dey 2019-1-10-134

Department of Business Administration

Date of Submission: May 24, 2021

East West University, Dhaka

Department of Business Administration
Table of Content

Introduction………………………………………………………………………………….1
Net Sales Revenue…………………………………………………………………….1
Net Profit Earning…………………………………………………………………….2
Returns………………………………………………………………………………...3
Financial Leverage…………………………………………………………………….3

Strategy and Forward Planning…………………………………………………………….4

Strategy………………………………………………………………………………..4
Forward Planning……………………………………………………………………...5

Ratio Analysis…………………………………………………………………………….…..6
Short-term Solvency Ratios……………………………………………………………6
Profitability and Activity Ratios……………………………………………………….7
Financial Leverage Ratios……………………………………………………………..8
Share of Equity Evaluation…………………………………………………………….9
Competitor Analysis………………………………………………………………….10

Cash Flow……………………………………………………………………………………12
Non-financial Performance Indicators……………………………………………….……14
Growth or Reduction of last five years Business………………………………..……16
Growth or Reduction in Manpower Position and Value …………………………..…17
Community …………………………………………………………..........................18
Health & Safety………………………………………………………………………18
Suggestions………………………………………………………………………...…18

Operating Cost Structure…………………………………………………………………..19

Recommendation and Conclusion…………………………………………………………20
References…………………………………………………………………………………...21
List of Abbreviations

CCL – Confidence Cement Limited

MCML – Meghna Cement Mills Limited
ROCE – Return of Capital Employed
EPS – Earning Per share
BDT – Bangladeshi Taka
FY– Fiscal Year
FDR – Fixed Deposit Receipt
ROA – Return on Assets
ROE – Return on Shareholder’s Equity
M.T – Metric Ton
CFT – Cubic Feet
Lists of Tables

Table 1.1 Revenue Growths in 2015 to 2019 fiscal year……………………………………..

Table 1.2 Net Profit Earning in 2015 to 2019………………………………………………...
Table 1.3 Profitability Ratios during 2015 to 2019…………………………………………...
Table 1.4 Financial Leverage Ratios in 2015 to 2019………………………………………..
Table 3.1 Ratio analysis during 2015 to 2019………………………………………………..
Table 3.2 Share or Equity Evaluation 2015 to 2019…………………………………………
Table 3.3 Competitor Analysis………………………………………………………………..
Table 4.1 Cash flow statement of fiscal 2019………………………………………………...
Table 5.1 Cement Plant Production capacity and Utilization percentage during 2015 to
2019……………………………………………………………………………………………..
Table 5.2 Ready Mix Plant Production capacity and Utilization percentage during 2015
to 2019…………………………………………………………………………………………..
Table 5.3 Company Manpower Position during 2015 to 2019……………………………...
Table 6.1 Operating Cost Structure in Fiscal year 2018-19………………………………...

Lists of Graphs

Graph 1.1 Graphical representation of Revenue growth from 2015 to 2019……………………..

Graph 1.2 Graphical representation of Net Profit from 2015 to 2019…………………………….
Graph 1.3 Graphical representation of Returns during 2015 to 2019…………………………….
Graph 1.4a Graphical representation of Debt Ratio during 2015 to 2019……………………….
Graph 1.4b Graphical representation of gearing ratio during 2015 to 2019…………………….
Graph 3.1a Graphical representation of Short-term Solvency Ratios during 2015 to 2019……...
Graph 3.1b Graphical representation of Profitability Ratios during 2015 to 2019……………..
Graph 3.1c Graphical representation of Activity Ratios during 2015 to 2019…………………...

Graph 5.1 Graphical representation of Production Utilization of Cement and Ready mix
Plant during 2015 to 2019……………………………………………………………………………….
1. Introduction

Confidence Cement Limited is the flagship company of Confidence Group of Companies of

Bangladesh. It’s registered in 1991 and went into commercial operation in 1994. Now it is one
of the largest producers of cement in the country. It is also a prominent Blue Chip company in
both the Dhaka & Chittagong Stock Exchange and there it is amongst the top performing
companies for the last 15 years.

Confidence Cement Limited is the first ISO 9002 certified cement manufacturing company in
Bangladesh. Today the company has the production capacity 1,050,000 Metric Tons annually.
It’s aim to be the finest cement manufacturing company of Bangladesh through the continuous
development and producing high level and consistent quality cement to satisfy all customer’s
need. Its’ overall strategic vision is durable and prosper in the market and tackling the internal
and external encounters along the way. [Source: Confidence Cement Limited Annual report 2018-2019]

During last five years period Confidence Cement Limited’s has generated remarkable cash
flows and stayed in a strong financial position. CCL’s financial performance also noteworthy
over the year. Company able to give dividend 30% to its shareholders, which is great profitable
significance for them and push them to competitive advantages. Analysis of CCL’s financial
key performance indicators is illustrated below:

Table 1.1 Revenue Growths in 2015 to 2019 fiscal year

Year of
2015 2016 2017 2018 2019
operation
Revenue 3,637,270,8 3,613,744,0 3,629,375,2 3,916,783,5 4,832,893,7
(BDT) 87 24 10 17 68
Source: http://lankabd.com and Confidence Cement Limited Annual Report from 2014-15 to 2018-19

Revenue Calculation from 2015 to 2019

6,000,000,000

5,000,000,000
Revenue (BDT)

4,000,000,000

3,000,000,000

2,000,000,000

1,000,000,000

-
2015 2016 2017 2018 2019
Revenue 3,637,270,887 3,613,744,024 3,629,375,210 3,916,783,517 4,832,893,768

Graph 1.1 Graphical representation of Revenue growth from 2015 to 2019

During the FY 2015 to FY 2018 time period CCL was generated stable revenue growth. But in
FY 2018-19, CCL’s total revenue was Tk. 4,832 million, an increase of Tk. 916 million from
FY 2017-18, resulting 123.39% higher revenue over last year due to increase in sales 123% of
the previous year. CCL has a positive growth in revenue in recent five years. During 2015 to
2019, the company’s revenue is increased by TK. 1,195 million (132.88%).

Table 1.2 Net Profit Earning in 2015 to 2019

Year of
2015 2016 2017 2018 2019
operation
Net Profit
326,140,075 459,760,225 498,124,144 305,866,042 389,267,545
Earning(BDT)
Source: http://lankabd.com and Confidence Cement Limited Annual Report from 2014-15 to 2018-19

Net Profit calculation after tax & interest from 2015 to 2019
600,000,000

500,000,000

400,000,000

300,000,000

200,000,000

100,000,000

-
2015 2016 2017 2018 2019

Net Profit Earning

Graph 1.2 Graphical representation of Net Profit from 2015 to 2019

A higher net profit margin determines that a company is able to successfully manage over its
costs and provide goods or services at a price significantly higher than its costs. The bar chart
shows that CCL net profit after tax and interest is highest in FY 2017 and the lowest in FY
2018 (Tk. 305 million). In FY 2016-17, net profit after tax of the Company was Tk. 498 million
while Tk. 459 million in FY 2015-16. During the recent five years’ time period the company
net profit increased only by 119.36% where during FY 2015 to 2017 that net profit was
increased by 152.73%.
Table 1.3 Profitability Ratios during 2015 to 2019

Year of
2015 2016 2017 2018 2019
operation

Return on Assets
5.86% 7.37% 6.45% 3.76% 4.28%
(ROA)

Return On Equity
10.51% 13.86% 13.16% 7.58% 8.94%
(ROE)

Return on Capital
6.07% 8.22% 6.54% 3.81% 4.74%
Employed
Source: http://lankabd.com and Confidence Cement Limited Annual Report from 2014-15 to 2018-19

Returns during 2015 to 2019

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2015 2016 2017 2018 2019

Return on Assets (ROA) Return On Equity (ROE) Return on Capital Employed

Graph 1.3 Graphical representation of Returns during 2015 to 2019

The ROA ratio represent the rate of return on company total investment after paid interest and
taxes. Higher the ROA percentage is better for business because that the way asset utilization
seems properly. The percentage of ROA ratio was fluctuated over the last five years. In FY
2016, the ROA of CCL Company is highest with 7.37% but it dropped to 4.28% in FY 2019.
Return on equity (ROE) is not steady over the five years’ time period. ROE stayed in the middle
of 7.58% to 13.86%. Decreasing ROE indicates that Confidence Cement Ltd. becoming less
capable for making profits and increasing shareholders value. In FY 2018, ROCE hit the lowest
percentage of the last five years and it is continuously decreasing over this time.
Table 1.4 Financial Leverage Ratios in 2015 to 2019

Year of
2015 2016 2017 2018 2019
operation

Debt Ratio 0.08% 0.05% 0.00% 1.10% 15.96%

Interest Coverage 4.273 - - 2.899 1.963

Cash Coverage
6.447 - - 4.555 3.926
Ratio

Gearing Ratio 48.89% 51.76% 55.08% 55.09% 55.79%

Source: http://lankabd.com and Confidence Cement Limited Annual Report from 2014-15 to 2018-19

Debt Ratio during 2015 to 2019

18.00%
16.00%
14.00%
Percentage (%)

12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2015 2016 2017 2018 2019
Debt Ratio 0.08% 0.05% 0.00% 1.10% 15.96%

Graph 1.4a Graphical representation of Debt Ratio during 2015 to 2019

Confidence Cement Ltd. debt ratio was stable from the year FY 2015(0.08%) to FY
2018(1.10%). But in FY 2019 the debt ratio increased in an extreme way and that is 15.96%.
High debt ratio indicates that CCL may be driving itself at risk of default on its loan if interest
rates were to increase unexpectedly.

In recent five year (2015-2019), CCL’s Interest coverage ratio changes between 1.96 times to
4.27 times. In FY 2015, company has experienced topmost interest coverage ratio (4.27 times)
where in FY 2019 that is lowermost (1.96 times) compare to recent years. In FY 2019, the
reason of lowest interest coverage ratio was the interest expense almost double (Tk.
238,096,429) comparing with last fiscal year (2017-18). CCL have to generate higher profit
rapidly or company might face financial difficulties in short term period.

Gearing Ratio during 2015 to 2019

58.00%

56.00%

54.00%

52.00%

50.00%

48.00%

46.00%

44.00%
2015 2016 2017 2018 2019

Gearing Ratio

Graph 1.4b Graphical representation of gearing ratio during 2015 to 2019

CCL’s Cash Coverage Ratio has fluctuated during last five year time period. In FY 2015,
company has experienced highest cash coverage ratio (6.44 times) where in FY 2019 that has
hit the lowest (3.92 times) compare to recent years. Due in increase interest expenses over the
years, the result is Cash coverage ratio affected for that. Decrease in cash coverage ratio
indicates company has less ability to meet the interest expense with its cash.

During last five years gearing ratio has aggravated due to increase in amount long-term
liabilities every year. In FY 2015, company’s gearing ratio was 48.89% but in FY 2019 it was
55.79%. That means around 7% increase in company recent five years’ time period.

Overall, Confidence Cement Ltd is generating a significant amount of profit from its
operations. Hence, some of these ratio indicates management must concerns about future threat
of financial conditions.
2. Strategy and Forward Planning

Strategy:
1. Manufacturing and selling the products to the customers with no compromise in the quality
and by continuing follow the code of business principle. [Source: Confidence Cement Limited Annual
Report from FY 2018-19]

2. Company will endure and tackle all the internal and external challenges along the way to
success. [Source: Confidence Cement Limited Annual Report from FY 2018-19]

3. To boost up the sales management of the company stated various sales schemes to dealers
and by improving the relationship with the respected customers to ensure future market growth.
[Source: Confidence Cement Limited Annual Report from FY 2018-19]

4. Management of confidence Cement Limited is very optimistic in agreement of necessary

reasonable plans and strategy in spite of sustainability its performances and financial position
and continue the operations for their goals. [Source: Confidence Cement Limited Annual Report from FY
2018-19]

Forward Planning:
1. CCL aims that they will be number one cement manufacturing company in Bangladesh by
constant development and by steadily producing high quality products. [Source: Confidence Cement
Limited Annual Report from FY 2018-19]

2. The Company and its Board of Directors would like to extend its foremost regard and
appreciation to the valued Shareholders and other stakeholders of the Company for their present
support and guidance to the Company that led to the cumulative achievements. [Source:
Confidence Cement Limited Annual Report from FY 2018-19]

3. The board of directors agreed to acquisition of 51,00,000 ordinary shares of Tk. 10 each of
the Zodiac Power Chittagong Limited.
[source:https://www.cemnet.com/News/story/167263/confidence-cement-acquires-zodiac-
power-chittagong-ltd.html?fbclid=IwAR2vXpb]

4. The board of directors has decided and authorized to sell of 816.73 decimals of land of the
company situated at Danga Mouza, Polash Upazilla, Narishingdi, Dhaka in service of
Confidence Cement Dhaka.
[source:https://stockbangladesh.com/news/search?keyword=&instrument_id=60&from_date
=&to_date=&page=4&fbclid=IwAR2ZYoUijWNUeBOG3OF1I1ZC2iglkZa2pSzjjZDJayrJR
UoYURzuVkUnHRM]
5. CCL will install brand new slag dryer at its cement plant in Sitakunda to ensure constant
assembly of the present Lines 2 and 3.
[source:https://www.cemnet.com/News/story/165224/confidence-cement-to-install-slag-
dryer-close-line1.html?fbclid=IwAR02fcMCj0nHNzA2bRMhdmrvUigxFy1QNOXgyvJBHN_N-
flAfjCHNYiR_hg]

Evaluation:
CCL company focusing to expand its business in whole country also they are concentrate their
focus on exporting. To serve the large number of people, Company has also focus on build a
factory in Dhaka.
3. Ratio Analysis
Table 3.1 Ratio analysis during 2015 to 2019 [source: Confidence Cement Limited Annual Report 2014-15 to 2018-19]
Short-term Solvency Ratios:
Confidence Cement Ltd.’s Current and Quick assets ratios in FY 2019 are 1.20 and 1.01 respectively
which is way above the normal. Higher current and quick ratio indicates that company has greater
liquidity, however if the current ratio is too high (above 2), it might be that company is unable to use
its current assets efficiently. Due to increase in current assets and decrease in current liabilities in 2019
company has more money in hand to pay its short term obligations compare to last year’s (2015 to
2018) current ratio.

In last five years Quick ratio has fluctuated, as we know more the quick ratio is better off for business.
Quick ratio of CCL has witnessed a steady decrease from 2016 to 2018. This suggest that in this year’s
company might face difficulties over inventory management and total current liabilities is much
higher. Hence, in 2019 company quick ratio increase to 1.01 and that make company is financially
more secure and stable in short term future.

Current and Quick Ratios from 2015 to 2019

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00
2015 2016 2017 2018 2019

Current Ratio Quick Ratio

Graph 3.1a Graphical representation of Short-term Solvency Ratios during 2015

to 2019

Profitability and Activity Ratios:

During FY 2015 to 2019, CCL total revenue is increased by 132.87% however the cost of sales
increased by 145.90%, indicating that costs of sales is 13.03% higher than total revenue due to increase
in production and for that need of raw materials consumed increased. In this five years’ time period
Gross, operating and net profit margin decreased by 8.26%, 9.47% and 0.91% respectively. CCL can
increase the percentage of its profits margins by increased the sales and decreased the company
operating costs.
Over the last five year ROA, ROE and ROCE all ratio has declined by 1.58%, 1.57% and 1.33%
respectively. Decrease in ROA indicates CCL doesn’t utilize its total assets effectively. On the other
hand decreasing ROE directs that Confidence Cement Ltd. becoming less capable for making profits
and increasing shareholders value. For the increase in ROA and ROE CCL need to increase their
revenue and net income with reducing in operating costs.

In FY 2019, CCL’s activity ratios illustrate that CCL pay the debt to their lender in 29 days but collect
the money in 71 days which reflect poor financial management over collection the receivable money
and payment due so early. If we compare this five year time period activity ratio then the Average
collection period and Average pay period of CCL improved over the years except 2019. As a result,
CCL shouldn’t pay before the collection period, or it will increase the company credit risk.

Profit Margings during 2015 to 2019

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
Gross Profit Margin Operating Profit Margin Net Profit Margin

2015 2016 2017 2018 2019

Graph 3.1b Graphical representation of Profitability Ratios during 2015 to 2019

Average Inventory, Collection and Pay Period from 2015 to 2019

120.000

100.000

80.000
Days

60.000

40.000

20.000

0.000
2015 2016 2017 2018 2019

Average Collection Period Average Pay Period Days in Inventory

Graph 3.1c Graphical representation of Activity Ratios during 2015 to 2019

Financial Leverage Ratio:
The gearing ratio and interest coverage ratio are decreased over the five year time period. The increase
in long term liabilities causes the gearing ratio is increased by 7% in last five year. If Company
shareholders invest more capital in company, company will improve in the situation in future and able
to mitigate the financial crisis. Over the years the interest expenses increased by 276.34% with that the
interest coverage ratio is decreased. CCL experienced its lowest interest coverage ratio (1.96 times) in
FY 2019. CCL have to generate higher profit rapidly or company might face financial difficulties in
short term period.

CCL debt ratio extremely increase in 2019 due to increase the debt in great amount. High debt ratio
indicates that CCL may be driving itself at risk of default on its loan if interest rates were to increase
unexpectedly. Other hand cash coverage ratio deceased over the year. In future for the decreasing of
cash coverage ratio, company will have less ability to meet the interest expense with its cash. Increase
in profit before tax can help to hold more cash in pay the interest expense.

Table 3.2 Share or Equity Evaluation 2015 to 2019

Year of operation 2015 2016 2017 2018 2019

Earning Per Share
7.249 10.218 11.071 5.665 6.008
(EPS)
Market-to-Book
1.256 1.086 1.380 2.094 2.314
Ratio
Price-Earning Ratio 11.947 7.836 10.484 27.626 25.898
Market Price per
86.6 80.07 116.07 156.5 155.6
Share
Source: http://lankabd.com and Confidence Cement Limited Annual Report from 2014-15 to 2018-19

Share or Equity Evaluation from 2015 to 2019

30.000

25.000

20.000

15.000

10.000

5.000

0.000
2015 2016 2017 2018 2019

Earning Per Share (EPS) Market-to-Book Ratio Price-Earning Ratio

Graph 3.2 Graphical representation of Share or Equity Evaluation during 2015 to 2019
Confidence Cement Ltd.’s share price has been fluctuating over the recent five year’s time period.
Company share price from 2015 to 2019 increased by 179.6% where the highest in year 2018 with
market price per share at Tk. 156.50. Company has experienced highest EPS in FY 2017 where the
company’s net income is highest among the recent years and the lowest EPS in FY 2018 where the net
income is the lowest. In FY 2019 CCL’s net income increase in compare to 2018 and that’s why EPS
has also seen increased in 2019. On the other hand Price earnings ratio was stable from FY 2015 to
FY 2017. Then in FY 2018 P/E ratio has dramatic increased to 27.63. But next year in 2019 price
earnings ratio dropped to 25.90. The reason for that CCL’s market price per share was highest (Tk.
156.50) in FY 2018 but it dropped only Tk. 1 in 2019 with increase in EPS (Tk. 6.01).
Table 3.3 Competitor Analysis
Based on fiscal year 2018-19 annual reports

Confidence Cement Meghna Cement

Ratio
Limited Bangladesh Limited
Short-term Solvency Ratios:
Current Ratio 1.203 0.804
Quick Ratio 1.009 0.702
Activity Ratios:
Total Asset Turnover 0.531 0.950
Net Fixed Turnover 1.181 9.022
Equity Turnover 1.109 9.386
Operating Cash Flow to Sales -9.81% 12.70%
Receivables Turnover 5.083 6.786
71.813 55.788
Average Collection Period
Days Days
Payable Turnover 12.586 6.968
29.000 52.385
Average Pay Period
Days Days
Inventory Turnover 7.692 12.881
47.450 28.337
Days in Inventory
Days Days
Financial Leverage Ratios:
Debt Ratio 0.160 0.220
1.963 0.377
Interest Coverage
Times Times
Long-term Debt to Equity Ratio 0.333 2.169
3.926 0.782
Cash Coverage Ratio
Times Times
Gearing Ratio 55.79% 82.50%
Profitability Ratios:
Gross Profit Margin 7.41% 10.20%
Operating Profit Margin 1.84% 5.80%
Net Profit Margin 8.05% 0.90%
Return on Assets (ROA) 4.28% 0.90%
Return on Equity (ROE) 8.94% 8.80%
Return on Capital Employed 4.74% 2.60%
Source: http://lankabd.com and Confidence Cement Limited & Meghna cement Limited Annual Report from FY 2018-19
Confidence Cement Ltd. gross profit earning in FY 2019 is 2.79% lower than Meghna Cement
Bangladesh Limited. The percentage Gross profit of CCL and MCML consecutively is 7.41% and
10.20%. But the net profit margin of CCL is around 9 times higher than MCML. The ROA and ROE
of both companies percentages indicate that CCL’s is better utilized their assets and shareholders’
equity. CCL’s ROA, ROE and ROCE are 4.28%, 8.94% and 4.74% compared with MCML are 0.90%,
8.80% and 2.60% repectively.

On the other hand, the CCL’s current and quick ratio against liability is higher than Meghna Cement
Bangladesh Limited. That indicates CCL seems to have a higher liquidity than MCML. Higher current
and quick ratio indicates that company has greater liquidity. The current and quick ratio of CCL is 1.2
and 1.01 respectively whereas MCML has 0.80 and 0.70 respectively. CCL has much more ability to
survive in future business from uncertainty rather than MCML.

MCML’s total asset turnover is much higher that CCL, which indicates that MCML utilize its total
assets effectively to generating sales revenue for the company. MCML Company has greater control
over average inventory, collection and pay period than CCL Company. MCML collect their money in
average 55 days where CCL collect their money from retailers and dealers in average 71 days and pay
in 52 days compare to CCL’s 29 days’ pay period.

CCL gearing ratio, cash and interest coverage ratio is in better position than MCML. CCL interest
coverage ratio is 5.20 times higher in comparison with MCML. The MCML cash coverage ratio is
0.782 times where CCL cash coverage ratio in FY 2019 is 3.926 times. Gearing ratio indicates that
MCML financial risk is much higher than CCL. This excessive debt can lead the business to financial
difficulties than CCL.

4. Cash Flow
Table 4.1 Cash flow statement of fiscal 2019

Particulars Amount in Taka

Cash received from customers 4,932,400,852
Payment to suppliers (5,141,923,045)
Income tax paid (48,568,148)
Interest Paid (216,100,881)
(a) Net Cash Generated from Operating Activities (474,191,222)
Purchase of Property, Plant & Equipment (153,755,538)
Proceeds on Sale of Property, Plant & Equipment 5,357,226
Dividend paid 1,733,933
Investment Income Received -
Increase/(Decrease) in short term loans/ Investments -
Proceeds from sale of quoted investments held for sale 16,886,449
Sale proceeds of ECPV ltd. Share -
Received from unquoted share of ECPVL Chittagong Ltd. -
paid to associated companies (41,000,000)
Investment in shares -
(b) Net Cash Flow from Investing Activities (170,777,930)
 Repayment of Long term debt -
Issuance (Repayment) of short-term debts (573,951,465)
Dividends Paid - Preference Shares (78,842,025)

Long term loan & lease finance 1,361,780,079

(c) Net Cash Flow Financing Activities 708,986,589
(d) Foreign currency translation adjustment 336,815
(e) Net Increase/(decrease) in Cash 64,017,437
(f) Cash at the beginning of the period 49,425,599
(g) Cash at the end of the period 113,443,036
Source: http://lankabd.com and Confidence Cement Limited Annual Report from FY 2018-19

Net cash generated from operating activities stay in negative figure because of cash received from
customer and others is Tk. 4932.40 million while high amount of payment to the suppliers, employees
and other is Tk. 5141.92 million. Confidence Cement Ltd.’s interest amount paid to the lenders in
2018-19 fiscal year is Tk. 216,100,881 and income tax paid to the government is Tk. 48,568,148.

Confidence cement Ltd.’s invested significant amount of money is to increase property and equipment
and the amount is Tk. 153,755,538 in 2019 while company earned cash inflow from proceeds on sale
of property, plant & equipment is Tk. 5,357,226. Company give dividend to the shareholders in FY
2019 is Tk. 1,733,933. From sale the investment company earned Tk. 16,886,449 while outflow of
cash payment to associate companies Tk. 41,000,000. In last, for the purchase of property and
equipment and paid to associated companies significant amount causes high amount of cash outflow
and net cash flow from investing activities stay in negative figure.

In FY 2019, Confidence Cement Ltd. repayment short term debts is Tk. 573,951,465 and dividend
paid to the preference shares is Tk. 78,842,025. Long term loan & lease finance is Tk. 1,361,780,079.
After all of that calculation the net cash flow financing activities account stay in positive figure.

Beginning of the fiscal year 2019 the cash and cash equivalents was Tk. 49,425,599 but end of the year
figure is Tk. 113,443,036 because of most of cash inflow during time period. If we compare cash flow
end of the period balance with last year (2018) to this year (2019) cash flow end balance, then we can
say that the amount is increased by 229.52%.
5. Non-financial Performance Indications

Table 5.1 Cement Plant Production capacity and Utilization percentage during 2015 to 2019

Year of Operation 2015 2016 2017 2018 2019

Production Capacity 1,122,631.7 1,119,816.6 1,049,440.0 1,045,052.9
753,498.57
(M.T) 5 7 0 4
Actual Production
707,258.00 873,457.00 527,449.00 577,192.00 710,636.00
(M.T)
Utilization of capacity
63% 78% 70% 55% 68%
(%)
Sales (M.T) 704,706.00 808,512.00 520,736.00 577,192.00 710,636.00
Source: Confidence Cement Limited Annual Report from 2014-15 to 2018-19

Table 5.2 Ready Mix Plant Production capacity and Utilization percentage during 2015 to 2019
Year of Operation 2015 2016 2017 2018 2019
Production Capacity
3,612,834 3,588,737 2,398,435 2,403,767 24,007,700
(CFT)
Actual Production
1,264,492 1,076,621 1,151,249 1,514,373 17,285,544
(CFT)
Utilization of capacity
35% 30% 48% 63% 72%
(%)
Sales Quantity (CFT) 1,120,637 1,264,456 1,151,249 1,514,373 1,728,544
Source: Confidence Cement Limited Annual Report from 2014-15 to 2018-19

Production Utilization during 2015 to 2019

90%
80%
70%
Percentage (%)

60%
50%
40%
30%
20%
10%
0%
2015 2016 2017 2018 2019
Cement Plant utilization (%) 63% 78% 70% 55% 68%
Ready mix Plant utilization (%) 35% 30% 48% 63% 72%

Graph 5.1 Graphical representation of Production Utilization of Cement and Ready mix Plant
during 2015 to 2019
Growth or Reduction of last five years Business:
CCL doesn’t grow that much in recent five years’ time period. The Production capacity of cement
plant has reduced by 6.91% in the last five years. As well as CCL company didn’t utilize its capacity
properly; however the utilization of production capacity growing by years. The sales suggests that
CCL’s cement sales increased by 100.84%. In 2019 the sales increased by 123.12% which a positive
sign for growth of CCL compare to 2018. Increase in sales and utilizing the capacity indicate that how
CCL has progressed.

In Ready mix plant utilization of the production capacity is increased along with the sales over the five
years. Sales suggest that it has increased by 154.24% in that time period. Because of better utilization
of the capacity revenues and net profit earning increase over the year.

Table 5.3 Company Manpower Position during 2015 to 2019

Year of operation 2015 2016 2017 2018 2019

Managers & Officers 160 172 190 175 214
Staffs 440 430 438 415 289
Workers 242 240 259 190 184
Total 842 842 887 780 687
Source: Confidence Cement Limited Annual Report from 2014-15 to 2018-19

Growth or Reduction in Manpower Position and Value:

The manpower position of CCL has decreased over the recent five years. In 2019 the total manpower
of CCL is only 687 where the total in 2015 is 842. We can interpret that because of the technological
evaluation company now more efficient and effective which reflect on the sales growth. In CCL
employees from different ethnic background, culture as well as sex. CCL 90% employees working
now who are joined in the beginning. This company is working friendly and believe in the long term
employment as well as maintain strong relationship between their employees by providing various
facilities. [Source: https://www.tbsnews.net/feature/panorama/how-junior-executive-became-trusted-
ceo-confidence-cement-198307?amp&fbclid=IwAR2X5e8fLBRsGAkbD9PLJEpVYVfcGv3l-
tprcA6JppFqtQ5RUn6yB80615k]

Community:
As Confidence Cement Limited is a flagship company of Confidence group, most CSR activities work
contribution done by the name of parent company (Confidence Group). This company is very much
engaged with organization like JAAGO Foundation, Blood donation campaign for Thalassemia
patients, Sponsor of Bangladesh Premier League.
[Source:https://www.confidencegroup.com.bd/csr.php?fbclid=IwAR2F6TfVlw9RsR4zVPScYxg6aNn
cwDjB7ELmNTaITFAMTbLox2LyDMLpho]
Health & Safety:
CCL always taken care of its employees and workers health and other safety issue. Company has
several policies to mitigate regarding the safety issues. [Source: Confidence Cement Limited Annual Report
from FY 2018-19]

Suggestions:
1. CCL could speak about how does the Health and safety helps the workers and employees to mitigate
their problems and disclose about the financial facilities.
2. CCL should mention what is the possible steps they taken for environment protect.

6. Operating Cost Structure

Table 6.1 Operating Cost Structure in Fiscal year 2018-19

Particulars Amount in Taka

Raw materials consumed :
At Cement plant 3,061,605,413
At Ready-mix plant 444,310,713
Packing materials consumed 230,531,029
Factory overhead :
At Cement plant 642,143,387
At Ready-mix plant 68,055,589
Difference between Opening and Closing
27,903,729
WIP
Other Expenses :
Administrative expenses 100,052,790
Selling and distribution expenses 194,675,717
Total Operating Cost 1,195,306,652
Source: Confidence Cement Limited Annual Report from FY 2018-19

Raw Materials Consumed, which represents the cost of ingredients directly need to produce Cement
and Ready mix. Confidence Cement Limited depended on import of raw material mostly. In cement
plant, the major required raw materials are Clinker, Gypsum, Lime stone, Grinding Aid and Slags
which are fully imported from other country. Total raw materials consumed for cement plant is Tk.
3,061,605,413 from that imported purchase amount is Tk.2,869,518,500 and local purchase amount is
Tk.171,914,000.
At Ready mix plant the major ingredients required are Cement, Chemicals, Stone Chips (20 mm) and
Stone Chips (10 mm). On this raw materials, CCL purchase Cement and Chemicals full amount from
the Local companies and for the other products CCL mostly rely on imports.
Company purchased packaging materials mainly from Local companies. In FY 2018-19 CCL
purchased 12,262,200 Pcs. of materials for cement packaging. Compare to last year, this year
purchased of packaging materials in quantity increased by 1,680,650 Pcs.

Factory overhead costs, this represent the total cost that are involved in producing Cement and Ready
mix products. In FY 2018-19, CCL has manufacturing cost for cement plant is Tk. 642,143,387. In
cement plant manufacturing costs are like gas, salaries, wages, benefits, insurances, repairing cost,
entertainment, power, traveling, gratuity and other expenses are included. For ready mix plant CCL
spends Tk. 68,055,589 in FY 2019, which is lower than last fiscal year.

Administrative cost indicates the cost for front office, salaries and wages of employees & directors,
gratuity cost, ISO expenses, printing, amortization, electricity, repairing etc. costs that are not involved
in productions. CCL administrative salaries, wages and benefits costs is Tk. 35,146,654 which is
increased by 119.50% comparing with last FY 2018.

Selling and distribution expenses are those expenses that are incurred in promote sales and give the
services and deliver the goods to customers. CCL expense for the Cement sales promotion in 2019 Tk.
2,802,954 whereas for ready mix sales promotion CCL spend nothing. For advertisement cement plant
cost Tk. 10,863,730 and for Ready mix plant Tk. 457,240 which is way more lower than Cement plant.
In cement plant for entertainment CCL cost Tk. 302,064.

Suggestions: Confidence Cement Ltd. can reduce their operating cost by self-dependency of
producing raw materials products rather than import them from foreign countries. Increase the
bargaining power in spite of purchasing packaging materials. This will help to reduce operating cost
and generate extra revenue.

7. Recommendation and Conclusion

Confidence Cement Limited started their business in aiming to number one cement brand in
Bangladesh based on the quality product ensure with value for customers money. After the 26+ years
journey of their business, it can say that they are in the right direction to achieving their goal. CCL has
generated noticeable growth over the years.

Moreover, the company might need some restructuring to get more benefited and gain maximum profit
like by inventory management system and credit control management system, cut off amount of current
and long term liabilities. As CCL is a fruitful company with generating effectively amount in growth
profit margin, they must handle the difficulties in future with effective management. Apart from the
financial performance, CCL has exemplary non-financial performance matters. However Confidence
cement Limited company need better financial structure with terms of healthy inventory and credit
management system to embellishment to its prospective.
8. References
1.
https://lankabd.com/?fbclid=IwAR3JbXQlpq6Lw0eQ4evd6qgmQ7REvvgL0wF1E34ksR2jWoFTIez
We1go3k
2.
https://www.amarstock.com/?fbclid=IwAR0GTe96oB0WJLBaclCPx27rhzPtaUQbENwwJU0MCq5
NDW3uLJUPoCjCGo
3. https://www.tbsnews.net/feature/panorama/how-junior-executive-became-trusted-ceo-confidence-
cement-198307?amp&fbclid=IwAR2X5e8fLBRsGAkbD9PLJEpVYVfcGv3l-
tprcA6JppFqtQ5RUn6yB80615k
4.
https://www.confidencegroup.com.bd/csr.php?fbclid=IwAR2F6TfVlw9RsR4zVPScYxg6aNncwDjB
7ELmNTaITFAMTbLox2LyDMLpho
5.
https://stockbangladesh.com/news/search?keyword=&instrument_id=60&from_date=&to_date=&pa
ge=4&fbclid=IwAR2ZYoUijWNUeBOG3OF1I1ZC2iglkZa2pSzjjZDJayrJRUoYURzuVkUnHRM
6.
https://www.dhakatribune.com/business/2019/09/04/confidence-cement-buys-51-stake-in-zodiac-
power?fbclid=IwAR0MGC03KMSNQbXpJ4PLF-BrpQYGuiVcfBXAb0W136utmkIGr_x_9pvYiVk
7.
https://www.cemnet.com/News/story/167263/confidence-cement-acquires-zodiac-power-chittagong-
ltd.html?fbclid=IwAR2vXpb
8.
https://www.cemnet.com/home/tags/Confidence%20Cement%20Ltd?fbclid=IwAR2QSsBeAj0XlWk
CJd0r98SXjRIhzEf7Pp8iVYlscYRUgOG0JJVGuKPX_AM
9.
https://www.cemnet.com/News/story/165224/confidence-cement-to-install-slag-dryer-close-line-
1.html?fbclid=IwAR02fcMCj0nHNzA2bRMhdmrvUigxFy1QNOXgyvJBHN_N-flAfjCHNYiR_hg