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Financial Analysis of BBS Cables

From 2016-2021

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Letter of Transmittal

09 December, 2023
Dr. Mahnoor Sattar
Senior Lecturer,
Department of Business Administration
East West University
Aftab Nagar, Dhaka- 1212, Bangladesh
Subject: Term paper on “BBS Cables Ltd.”

Dear Ma’am,
It gives us immense pleasure in submitting to you the report on “BBS Cables Ltd.” All
information collected from different sources of data, our imagination, websites, and online
research.
While preparing the report, we closely focused on the topic and tried to assimilate and to provide
the most complete information available. We believe that it will provide you a clear scenario of
the product.
We thank you for allowing us to do a term paper on a new idea. This will definitely give us an
experience which we can use in our professional life. We will be always available for any further
queries and to answer any question on this report.
Sincerely,
Md. Sadman Ahmmed Chowdhuri.
ID: 2021-3-60-040
On behalf of the group.

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Acknowledgement
A successful term paper requires the equal contribution of all participants. First and foremost,
however, we would like to express our gratitude to our esteemed and honorable faculty member,
Dr. Mahnoor Sattar ma'am, for her superb instruction, which has helped us finish this term paper.
We could not have finished it without her guidance, advise, and instruction. We express our
gratitude to every individual in the organization. We owe a great deal to the company and to each
other because without them, we could not have finished our paper in an efficient manner.

Table of Contents

Executive Summary
Introduction
Origin of the study
Objective of the study
Scope of the study
Limitations of the study
Methodology
Company overview
Findings & Analysis
Growth Analysis
Comparison
Conclusion & Recommendation
Reference

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Executive Sumamry:
Over the past five years, BBS Cables Limited has experienced significant financial growth across
key areas like total assets, shareholder equity, and stock performance. However, recent concerns
have emerged with fluctuations in sales and a decline in net income, prompting a closer
examination of these trends. The company's increased dependence on long-term financing raises
potential questions about financial leverage and risk exposure. Furthermore, inconsistent
dividend distribution patterns necessitate a deeper understanding of the company's financial
strategy and dividend policy.
To ensure long-term success, BBS Cables should conduct a thorough analysis of the recent
decline in sales and net income, assess financial risk associated with growing long-term
liabilities, implement a consistent dividend policy aligned with shareholder expectations, and
maintain its focus on sustainability and innovation to stay ahead of the competition. By
addressing these critical areas, BBS Cables can leverage its strong financial foundation and
achieve its ambitious goals for continued growth and prosperity.

Introduction: BBS Cables Limited is a leading cable manufacturer in Bangladesh, producing

various types of electrical wires and cables since 2009. The company is a sister concern of
Bangladesh Building Systems Limited, a listed steel building company. The company aims to be
a global leader in the cable industry and contribute to Bangladesh’s development.

This report explores the history, growth, services, and impact of BBS Cables Limited on the
cable industry. We examine the company’s dedication to sustainability, customer-oriented
approach, and ongoing efforts to innovate the cable industry in Bangladesh. We aim to provide a
comprehensive view of BBS Cables Limited and its essential role in the country’s cable industry
through a thorough analysis.

Object of the study: The main objective of this study is to conduct a comprehensive financial
analysis of BBS Cables Limited for a five-year period. This study aims to evaluate the
company’s financial performance and position by using important financial measures such as
Total Assets, Total Liabilities, Current Liabilities, Long-term Liabilities, Shareholder’s Equity,
Sales, and Net Income. The study intends to achieve the following specific objectives:

 To examine the trends in BBS Cables’ Total Assets over the last five years and determine
whether they have increased or decreased.
 To analyze the changes in Total Liabilities, distinguishing between Current and Long-
term Liabilities, to get an insight into the company’s financial structure and obligations.
 To assess the changes in Shareholders’ Equity as an indicator of the company’s financial
health and net worth.

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  To measure BBS Cables’ revenue generation and profitability by analyzing Sales and Net
Income trends.
 To provide recommendations based on the findings of the financial analysis, identify
areas of strength and areas that may need improvement.

Company Overview:
BBS Cables Limited Bangladesh is a company that manufactures and sells various types of
electrical wires and cables. The company was founded in 2009 as a sister concern of Bangladesh
Building Systems Limited, a pre-engineered steel building manufacturer and a publicly traded
listed company. The company’s products include house wiring cable, low voltage cable, power
cable, fire alarm cable, and aluminum wire and cable. The company’s mission is to provide
quality products and services to its customers, maintain high standards of safety and
environmental protection, and achieve excellence in innovation and technology. The company’s
vision is to become a global leader in the cable industry and contribute to the socio-economic
development of Bangladesh.
The cable industry in Bangladesh is a growing and competitive sector, with a high demand for
electrical wires and cables for various purposes, such as power generation, transmission,
distribution, industrial, commercial, and residential applications. According to a report by
Research and Markets, the Bangladesh electric wire and cable market is expected to grow at a
compound annual growth rate (CAGR) of 12.4% during 2020-2025. The key factors driving the
market growth are the increasing electrification rate, urbanization, industrialization,
infrastructure development, and government initiatives to expand the power sector. The major
challenges faced by the industry are the high cost of raw materials, lack of skilled labor, and
quality issues. The industry is also facing competition from imported products, especially from
China and India. The industry players are adopting various strategies to gain a competitive edge,
such as product diversification, capacity expansion, technological advancement, and quality
improvement.
BBS Cables Limited Bangladesh is one of the leading cable manufacturers in the country, with a
strong market position and a reputation for quality and innovation. The company has a state-of-
the-art manufacturing facility, equipped with modern machinery and technology. The company
has a skilled and experienced workforce, led by a professional management team. The company
has a diversified customer base, ranging from government agencies, public utilities, private
sector companies, and individual consumers. The company has a wide distribution network,
covering all the major cities and towns in Bangladesh. The company also exports its products to
various countries, such as India, Nepal, Bhutan, Myanmar, and Sri Lanka.
 Financial Highlights, (2016-17 to 2020-21 Fiscal year) 5 years
The company’s financial performance has been impressive, with a steady growth in
revenue and net income over the years. The company’s revenue increased from BDT 2.4
billion in 2017 to BDT 3.6 billion in 2021, registering a CAGR of 10.6%. The company’s
net income increased from BDT 0.3 billion in 2017 to BDT 0.5 billion in 2021,
registering a CAGR of 12.2%. The company’s earnings per share (EPS) increased from

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 BDT 1.8 in 2017 to BDT 2.6 in 2021, registering a CAGR of 9.7%. The company’s
return on equity (ROE) increased from 18.7% in 2017 to 20.3% in 2021, indicating a high
profitability and efficiency. The company’s dividend payout ratio increased from 22.2%
in 2017 to 33.3% in 2021, indicating a high shareholder value creation. [Source: Annual
report of BBS Cable LTD.]
The company’s stock is listed on the Dhaka Stock Exchange (DSE) under the ticker
symbol BBSCABLES. The company’s market capitalization as of November 30, 2023
was BDT 10.5 billion, making it one of the most valuable cable companies in
Bangladesh. The company’s stock price as of November 30, 2023 was BDT 49.9,
representing a price-to-earnings (P/E) ratio of 17.9 and a price-to-book (P/B) ratio of 4.4.
The company’s stock has performed well in the past year, gaining 23.5% in value,
outperforming the DSE All Share Price Index (DSI), which gained 16.4% in the same
period. [Source: Internet ]

 The following services provides by The BBS Cables Limited:

 Manufacturing and selling various types of electrical wires and cables, such as
house wiring cable, low voltage cable, power cable, fire alarm cable, and
aluminum wire and cable.
 Importing, exporting, and distributing different kinds of cables, such as aluminum
cables, copper cables, silicon cables, optical fiber cables, power cables, rubber
cables, railway signaling cables, welding cables and jelly-filled cables,
automobiles cables, submersible cables, coaxial cables, flexible and house wire
cables and electrical, electronic, telecommunication cables and wires.
 Providing quality products and services to its customers, maintaining high
standards of safety and environmental protection, and achieving excellence in
innovation and technology
 Contributing to the socio-economic development of Bangladesh by creating
employment opportunities, paying taxes and duties, and supporting social cause,

 Mission
 To provide quality products and services to its customers, maintain high standards
of safety and environmental protection, and achieve excellence in innovation and
technology.
 Vision
 To become a global leader in the cable industry and contribute to the socio-
economic development of Bangladesh.

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Growth Analysis

Growth of Total Asset

Year 2016-17 2017-18 2018-19 2019-20 2020-21
Growth 24.07% 15.95% 32.09% 18.44% 10.37%

Graph:

Total Asset
35.00%
32.09%
30.00%

25.00% 24.07%

20.00%
18.44%
15.00% 15.95%

10.00% 10.37%

5.00%

0.00%
2 0 16 - 2 01 7 2 0 17 - 2 01 8 2 0 18 - 2 01 9 2 0 19 - 2 02 0 2 0 20 - 2 02 1

Over the previous five years, the total asset has grown steadily, with the largest growth rate of
32.09% occurring in 2018–19.
Although the growth rate has decreased over the last two years, it is still positive in 2020–21, at
10.37%.
The positive trend indicates the company's ability to expand its asset base, potentially through
investments in technology, infrastructure, or acquisitions.

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Growth of Total Long-Term Liabilities:
Year 2016-17 2017-18 2018-19 2019-20 2020-21
Growth -4.95% 8.95% 16.88% 23.46% 0.56%

Graph:

Long-term Liabiliti es
30.00%
25.00%
23.46%
20.00%
16.88%
15.00%
10.00% 8.95%
5.00%
0.00% 0.56%

-5.00% -4.95%
-10.00%
2 0 16 - 2 01 7 2 0 17 - 2 01 8 2 0 18 - 2 01 9 2 0 19 - 2 02 0 2 0 20 - 2 02 1

The growth in Total Long-Term Liabilities has been fluctuating, showing an overall increase over
the years with a CAGR of 9.17%.
This suggests that the company has been relying on long-term financing, and a detailed analysis
would be needed to understand the nature and purpose of these liabilities.

Growth of Total Shareholder’s Equity:

Year 2016-17 2017-18 2018-19 2019-20 2020-21
Growth 36.36% 45.85% 39.28% 21.48% 13.31%

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 Graph:

Shareholder's Equity
45.85%

39.28%
36.36%

21.48%

13.31%

2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Over the previous five years, the total shareholder equity has increased gradually, with the largest
growth rate of 45.85% occurring in 2017–18.
Although the growth rate has decreased over the last two years, it is still positive in 2020–21, at
13.31%.

Growth of Dividend:
Stock:
Year 2016-17 2017-18 2018-19 2019-20 2020-21
Growth 0% 0% 33.33% 0% -50%

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 Graph

Growth Dividend(Stock)
40.00%
30.00%
20.00%
10.00%
0.00%
-10.00%
-20.00%
-30.00%
-40.00%
-50.00%
-60.00%
2016- 2017 2017- 2018 2018- 2019 2019- 2020 2020- 2021

Over the last five years, the stock's dividend has fluctuated, declining by 50% in 2020–21 and
growing at a rate of 33.33% in 2018–19.
The cash dividend has not changed during the previous five years at 0%.
Cash:
Year 2016-17 2017-18 2018-19 2019-20 2020-21
Growth 0% 100% 0% 0% 0%

Graph

Growth of Dividend(Cash)
120.00%

100.00%

80.00%

60.00%

40.00%

20.00%

0.00%
2 0 16 - 2 01 7 2 0 17 - 2 01 8 2 0 18 - 2 01 9 2 0 19 - 2 02 0 2 0 20 - 2 02 1

The growth in dividends has been inconsistent, with a notable decrease in the most recent fiscal
year.

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Further investigation into the company's dividend policy and financial strategy is essential to
understand the reasons behind this fluctuation.

Growth of Sales
Year 2016-17 2017-18 2018-19 2019-20 2020-21
Growth 35.95% 87.34% 29.20% -16.22% -10.50%
Graph

Sales
100.00%

80.00%

60.00%

40.00%

20.00%

0.00%

-20.00%

-40.00%
2 0 16 - 2 01 7 2 0 17 - 2 01 8 2 0 18 - 2 01 9 2 0 19 - 2 02 0 2 0 20 - 2 02 1

The company has shown substantial growth in sales from 2016-17 to 2019-20, with a significant
increase of 87.34% in the second year.
However, there was a decline in sales in the last two fiscal years, indicating potential challenges
or shifts in market demand.
Growth of Net Income:
Year 2016-17 2017-18 2018-19 2019-20 2020-21
Growth 67.96% 169.69% 30.59% -20.14% -19.98%

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 Graph:

Net Income
200.00%

169.69%
150.00%

100.00%

67.96%
50.00%
30.59%

0.00%
-20.14% -19.98%

-50.00%
2 0 16 - 2 01 7 2 0 17 - 2 01 8 2 0 18 - 2 01 9 2 0 19 - 2 02 0 2 0 20 - 2 02 1

The Net Income of BBS Cables Limited exhibited impressive growth in the initial years, but it
declined in the last two fiscal years.
- The negative growth may raise concerns and requires an in-depth analysis of the factors
affecting the company's profitability.

Additional Observations:
Over the last two years, the company's total long-term obligations have increased more quickly
than its total assets. This can indicate that the company's financial leverage is growing, which
could put it at greater danger of financial hardship if interest rates rise or its revenue or
profitability declines.
Over the previous five years, the company's stock dividend has fluctuated, declining by 50% in
2020–21. This can indicate that the business must hold onto cash for investments or that its
profitability is erratic.
Over the last two years, the company's net income and sales have decreased. Numerous
variables, including industry trends, company-specific difficulties, or prevailing economic
conditions, could be to blame for this.

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Conclusion:
BBS Cables Limited has grown significantly in several financial areas, including total assets,
shareholder equity, and stock performance. However, recent issues such as fluctuating sales and
declining net income should be thoroughly investigated. The company's mission and vision,
which emphasize sustainability and innovation, may play a critical role in overcoming challenges
and sustaining growth. To provide a comprehensive evaluation of the company's financial health
and prospects, additional analysis, including a detailed examination of financial statements and
market conditions, is recommended.

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