Term paper On

“Financial Performance Analysis and Bond

Issuance Eligibility Analysis”
Course : FIN101 (Principle of Finance)
Section: 04
Semester: Spring
2024

Course Instructor:

Dr. Shabiha Akter

Asistant Professor
Department of Business Administration

Date of Submission: 29 Feb 2024

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 Submitted By:

 Sakil Ahmed Reza (2022-1-60-027)

7th Semester
Department of CSE
Work: Data Collection and finding information for bond application schedule
A guidelines.

 Sabrina Akter (2022-1-60-417)

7th Semester
Department of CSE
Work: DTA and ROA findings and comment writing.

 Budrun Nahar Bristy (2022-1-60-144)

7th Semester
Department of CSE
Work:Finding information for bond application schedule
A guidelines.

 Sabiha Nusrat (2022-1-60-303)

7th Semester
Department of CSE
Work: Discuss about company overview and intro writing

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 Table of Contents
Introduction..................................................................................................4
Objective.......................................................................................................5
Company
overview.................................................................................................6
Analysis and
discussion ................................................................................................7
Analysis and
discussion ................................................................................................8
Bond
Application..............................................................................................9
Conclusion.............................................................................................11
Appendix.....................................................................................................12

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 Introduction
Financial performance analysis is the process of evaluating a company's financial health and
operational efficiency by examining various financial metrics and ratios. This analysis helps
stakeholders, such as investors, creditors, and management, to assess the company's profitability,
liquidity, solvency, and overall effectiveness in utilizing its resources. By conducting financial
performance analysis, stakeholders can make informed decisions regarding investment, lending, and
strategic planning. Bond issuance eligibility analysis involves evaluating the suitability and readiness
of a corporation or entity to issue bonds in the financial markets. This process typically involves a
comprehensive assessment of the issuer’s creditworthiness, financial stability, and ability to meet its
debt obligations. Factors considered in bond issuance eligibility analysis may include the issuer’s
credit rating, financial performance, cash flow projections, debt levels, collateral, market conditions,
and regulatory requirements. The analysis aims to determine whether the issuer has the necessary
financial strength and credibility to successfully issue bonds, attract investors, and fulfill its debt
obligations over the bonds tenure. It helps both issuers and investors gauge the risks associated with
bond issuance and make informed decisions regarding investment opportunities in the bond market.

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 Objective
In this term paper, we are about to analysis and discuss financial performance & bond issuance
eligibility where BSEC is willing to give approval to Robi Company. We will evaluate their data
available on the Dhaka Stock Exchange website. And provide comprehensive analysis of the
findings.

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 Company Overview
Robi Axiata LTD.
Robi was established in 1997 as Telekom Malaysia International (Bangladesh), a joint venture
between Telekom Malaysia Berhad and A.K. Khan & Co. Limited. It commenced operations in
1998 under the brand name Aktel. In 2010, the company was re branded as “Robi” after a merger
with another telecom operator, Warid Telecom. Currently, Robi is a subsidiary of Axiata Group
Berhad, one of the largest telecommunications groups in Asia. Robi operates in the
telecommunications industry, providing a wide range of mobile communication services to
consumers and businesses in Bangladesh. As a key player in the industry, Robi competes with
other telecom operators such as Grameenphone, Banglalink, and Teletalk. Robi offers various
products and services, including
Mobile telephony: Robi provides voice calling, messaging (SMS, MMS), and data services to its
subscribers through its extensive network infrastructure.Internet services: Robi offers mobile
internet services, including 2G, 3G, and 4G/LTE connectivity,allowing customers to access the
internet on their mobile devices.
Value-added services: Robi provides a range of value-added services such as content
subscriptions,entertainment services, mobile banking, and utility bill payments.
Roaming services: Robi offers international roaming services, allowing customers to use their
mobile phones while traveling abroad.
Business solutions: Robi offers various telecom solutions tailored for businesses, including
corporate mobile plans, data connectivity, and enterprise solutions.
Overall, Robi has established itself as a prominent player in the Bangladeshi telecommunications
market, catering to the diverse communication needs of its customers with innovative products
and service.

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 Analysis & Discussion
Debt to total assets ratio (DTA)
The Debt to Total Assets (DTA) ratio is a financial metric used to measure the proportion of a
company's assets that are financed by debt. It is calculated by dividing total debt by total assets. The
formula for the Debt to Total Assets ratio is:
Debt to total assets ratio (DTA) = Total Liabilities/Total Assets

Total debt includes both short-term and long-term debt obligations, such as loans, bonds, and other
forms of debt financing. Total assets represent all of the resources owned by the company, including
both tangible assets like property, equipment, and inventory, as well as intangible assets like patents
and trademarks.
The financial statements of Robi Axiata Ltd. are given below:

Year Total Asset Toatl Liabilities Net Income

2019 171969 112380 169
2020 199465 133509 1553
2021 207594 141387 1803

For year 2019 DTA= 112380/171969 = 0.653 = 65.3%

For year 2020 DTA= 133509/199465 = 0.669 = 66.9%
For year 2021 DTA= 141387/207594 = 0.681 = 68.1%

Debt-to-Asset (DTA), of 2019, 2020, 2021 are represented as line graph,

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From the data and graph, The DTA ratio has been steadily increasing over the three-year period.
Moving from 0.653 in 2019 to 0.681 in 2021 indicates a consistent upward trend in the proportion of
assets financed by debt.

The Return on Assets (ROA)

The Return on Assets (ROA) is a crucial financial metric that holds significance when a company
is contemplating the issuance of bonds. ROA measures the efficiency of a company in generating
profits from its assets. ROA serves as an important indicator of a company's operational efficiency
and profitability. When a company exhibits a favorable ROA, it signals to potential bondholders
that the business is adept at utilizing its assets to generate returns. This can instill confidence
among investors, as a higher ROA implies a lower level of financial risk associated with the bond
investment. Credit rating agencies often consider ROA as part of their assessment when
determining a company's creditworthiness.
The Return on Assets (ROA) = Net income/Total assets
For year 2019 = 169/171969 = 0.0009 = .09%
For year 2020 = 1553/199465 = 0.0077 = .8%
For year 2021 = 1803/207594 = 0.0087 = .9%

From the data and graph,There has been a remarkable improvement in Robi Company's ROA over
the three-year period. The ratio has increased substantially from 0.09 in 2019 to 0.9 in 2021.

Eligibility
As per the requirement of the question the specific conditions were that the DTA shall not exceed
50% and the ROA shall be at least 10% in the latest year of analysis(i.e.,2021) but based on our
analysis we got DTA in our calculation 65.3%,66.9%,68.1% which is higher than 50% and ROA’s
values are 0.09%,0.8%,0.9% which is lower than 10%. so We can say that the selected company
ROBI is not eligible to issue the bond.

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 Bond Application

In order to issue a bond in Bangladesh, an issuer must first submit an application with the complete
schedule A of the ‘Securities and Exchange Commission (Private Placement of Debt Securities)
Rules, 2012’ guidelines.

Details of Schedule A of an application is given below:

1. Name of the issuer Robi Axiata LTD.

2. Legal status of the issuer
3. Address and phone number of the issuer
In terms of legal status, Robi Axiata
Limited is typically registered as a
private limited company under the
laws of Bangladesh.
53 Gulshan South Avenue Gulshan
Dhaka 1212 Bangladesh
Phone: +880 2 9887146

Robi Corporate Office 53 Gulshan South

4. Name, address and phone number of Avenue Gulshan 1, Dhaka 1212 Bangladesh
the contact person Phone: +880 2 9887146

5. Date of incorporation March 28, 1997

6. Date of commencement of business 1997
7. Authorized capital 60000000000
8. Paid-up capital 52379328950
9. Total equity 62500000000
10. Net worth 1723500000
11. Total amount of debt due from the issuer 57851300000
12. Type of collateral securities being Telecom infrastructure assets
offered
13. Type of debt instruments to be issued Convertible Bonds
14. Face value amount 10
15. Coupon rate/discount rate and YTM 10.5%
16. Tenor/Maturity 10.1 Years
17. Mode of redemption Amortization
18. Rate of return: 2.73%
19. Applicable tax rate: Corporate Income Tax
20. Period within which securities to be 6 Month
issued:
21. Name of the trustee: Axiata Group
22. Paid-up capital of the trustee: 52,379,328,950

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23. Net worth of the trustee: 57,851,000,000
24. Credit Rating status of the issue: AA2
Credit Rating Agency of Bangladesh
25. Rating assigned by:
Limited (CRAB)
26. Date of audited accounts: 15 March 2022

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 Conclusion
In conclusion, the exploration of financial performance and bond issuance eligibility has provided
a comprehensive understanding of the intricate relationship between these two critical facets of
corporate finance. Through a thorough examination of financial indicators, industry benchmarks,
and regulatory considerations, we have uncovered the pivotal role that financial health plays in
shaping an organization's ability to access the bond market. Delving into the bond issuance process,
we have unraveled the multifaceted criteria that companies must navigate to successfully tap into
the bond market. From credit rating requirements to regulatory compliance, the eligibility analysis
has shed light on the stringent standards that govern the issuance of bonds. The Return on Assets
(ROA) has emerged as a pivotal metric, showcasing a company's efficiency in converting its assets
into profits and influencing the cost of debt.

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 Appendix
https://www.wsj.com/market-data/quotes/BD/XDHA/ROBI/financials/annual/income-statement
https://en.wikipedia.org/wiki/Robi_(company)
https://www.wsj.com/market-data/quotes/BD/XDHA/ROBI/financials/annual/balance-sheet
https://www.robi.com.bd/en/corporate/investor-relations/quarterly-business-update-presentation

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