Working capital supervision of Heidelberg Cement Bangladesh Limited (HCBL) Executive Overview: In this statement we have offered the overall seed money management of Heidelberg Concrete Bangladesh Limited (HCBL). We certainly have gather maximum information from the annual reports and by choosing interview of Board of Director, Meters. Abul Hashem, Company Admin.
In this statement we have attempted to match the terms and conditions we learned in FIN340 with HCBL’s seed money management. We now have done economic analysis and gave suggestion.
Company Review: Heidelberg Concrete Bangladesh can be one the largest producers of quality concrete in Bangladesh. Heidelberg Bare cement Group from Germany, among the world’s market leaders in structure and building material with operations in more than 40 countries, possesses 61% shares of the firm. In 1998 Heidelberg Cement Group established the presence in Bangladesh by setting up a floating terminal with on board bagging facilities inside the port of Chittagong and by distributing the cement towards the key markets of Dhaka and Chittagong.
In 1999 the group further more strengthened its position in Bangladesh and constructed a greenfield manufacturing plant around Dhaka namely “Scancement International Limited with an installed capacity of 0. 750 million tons per year. In 2000 Heidelberg Cement group also purchased a minority location in Chittagong based firm namely “Chittagong Cement Clinker Griding Co. Limited (CCCGCL) quickly followed by the acquisition of a in controlling stake. The plant in Chittagong has a installed capability of zero. 7 , 000, 000 ton annually. In 2003, the two companies were blend and the provider’s name was changed to Heidelberg Cement Bangladesh Limited.
Corporate and business Mission: The Corporate Image: Building worldwide development by building a better world. Business Culture: Building on community responsibility pertaining to international accomplishment Employee Insurance plan: Building the business within the knowledge of our people Marketplace Strategy: Building our growth on a stable base of earnings Consumer Philosophy: Building customer satisfaction Top quality Standard: Building on top quality products to make reputation Commitment to Development: Building in new solutions determines our future accomplishment
Brief Background Heidelberg Concrete Bangladesh Limited meets 13% of the Bangladesh demand for concrete from two plants located at Dhaka , Chittagong. Heidelberg Bare cement Bangladesh Limited employs 260 people around the world. The company with 1 . your five million shades annual bare cement production has become a major power in the Bangladesh Cement industry over the last eight years. In Bangladesh, Heidelberg group is among the largest overseas investors having an investment of 100 mil US$ exceeding 260 staff working round the clock to work out as planned the mission of this great global company.
By gratifying the requirements and aspirations of it is customers, personnel, shareholders and the wider community, the company can maintain its situation of power as a environmentally friendly cement provider without compromising commitment to long term balance and environmental responsibility. Heidelberg Cement Bangladesh Limited can be described as sister area of issue Heidelberg Concrete Group. Environmental Policy Heidelberg Cement Bangladesh Limited Safeguard of the environment is an integral part of Heidelberg Bare cement Group’s technique. As organic resources are the basis of concrete, measures intended for sustainable environmental care will be adopted in all of the our procedures.
In Bangladesh, our insurance plan is to produce high quality bare cement, optimize operations to save on normal resources and prevent pollution to be able to create a solution and more secure environment. Products , Innovation Portland Composite Cement (PCC) As part of it is relentless pursuit for development and continuous drive to further improve quality, HeidelbergCement has introduced Portland Composite Bare cement (PCC) during 2003. Fascinating, gripping, riveting European Best practice rules in cement producing built HeidelbergCement Bangladesh Ltd. the pioneer from this sector. Now-a-days all the cement factories of Bangladesh will be producing concrete as per European Norm.
The class Portland Composite Cement (CEM II) is the market head in The european countries. Cement created according to the BDS EN ScanCement and RubyCement are designed to accomplish the best qualities for its customers, this consequence is attained by design applying clinker and high quality other constituents. PCC has the the best possible of: Sturdiness, Long-term power and workability. ScanCement and RubyCement happen to be produced in line with the European rules BDS SOBRE 197-1: the year 2003. Characteristics of ScanCement as well as RubyCement: Bigger Strength ScanCement and RubyCement have bigger long-term durability than a common Portland Concrete (OPC).
The slag component in the design contributes that the gap in long-term strength with OPC is widening as period progresses. Larger Durability The design of ScanCement and RubyCement boosts the density of concrete (lower permeability). Smaller sized voids would be the effect of the reaction between the clinker and the hudproblem. This density contributes to the durability and lifetime of the construction. Better Workability To improve the caliber of plaster and masonry job Limestone is definitely added to the design of ScanCement and RubyCement. This improves firmly the workability of the concrete floor. Plastering can look smoother, better and more amazing.
The tangible is easier to use. Other Improvements On top of the above-mentioned improvements ScanCement and RubyCement minimizes thermal breaking. Due to the hud relaterade problem in the style less heat is made which reduces the risk of thermal cracks. Furthermore our brands use fewer water to offer the required workability. This plays a role in the strength and quality with the construction. Daily Cash Influx and Funds Outflow: Right here we have presented the daily cash influx and outflow of HCBL. 200820072006 Money received from customers6, 332, 191, 0005, 573, 231, 0004, 963, 425, 000 Cash received from other working income84, 205, 00049, 963, 00014, 630, 000
Cash Inflow throughout the year6, 416, 396, 500. 00 5, 623, 194, 000. 00 4, 978, 055, 1000. 00 Daily Cash Inflow17, 579, 167. 12 12-15, 406, 010. 96 13, 638, 506. 85 200820072006 Payment intended for financial expense(68, 293, 000)(55, 096, 000)(96, 760, 000) Income tax paid(206, 802, 000)(96, 947, 000)(35, 495, 000) Cash paid out to suppliers(5, 480, 284, 000)(3, 835, 873, 000)(3, 334, 740, 000) Money paid for working expenses(628, 326, 000)(507, 571, 000)(501, 761, 000) Funds outflow through the year(6, 383, 702, 992. 00)(4, 495, 484, 993. 00)(3, 968, 753, 994. 00) Daily Funds outflow(17, 489, 597. 24)(12, 316, 397. 24)(10, 873, 298. 1) Net Daily Cash Inflow89, 569. 883, 089, 613. 722, 765, 208. 24 Cash inflows and outflows are not correctly synchronized. Here we have net cash inflows in 3 years, it shows that HCBL experienced sufficient money supply to finance the operation efficiently. Changes in Short term personal loan Account: The HCBL have no marketable investments account in balance sheet. In 2006 the company includes a short term loan of 467884000 and in 2007 , 2008 the corporation has short term installment loans of 654441000 , 829715000. From 2006 to 2007 there is an increase in Short term loan bank account of tk. 186557000.
And from 3 years ago to 2008 the short term personal loan has boost by Tk. 175274000. Within the period the short term loan has grown over the period. The financial loans were mainly taken from their very own sister matter Meghna Strength Limited. Seasonality impact in Cash Influx and Money Outflow: Seasonality Variations in Cash moves from revenue: Highest revenue: We have arrive to know from your interview there is seasonality exists in Heidelberg cement. Their peak in sales and variation in cash flow is around quarterly basis. It has optimum of the product sales during January to March. In this time they have to maintain huge inventory.
By these time their revenue increase, consequently gross revenue and revenue increase and cash inflow also increases in this initial quarter. They may have also great sales via October to April. Typical cash influx comes during this time period. From Might to Sept. 2010 their revenue usually reduce because of wet season. Funds Outflow: The moment sales increase marketing and transportation expenses maximize. As a result, money outflow increases at this time. Because raw materials are mostly imported after that inter business trade therefore they do not have to pay immediately a huge money when they import RM. They will get a adaptable credit term.
Geographical Distributed and Clients: Heidelberg Bare cement has divided their organization in six divisions in Bangladesh. They have two main branches in Dhaka and Chittagong. They may have also sales people in other 4 divisions. Although most of the sales generate from Dhaka and Chittagong categories. Then Sylhet and sales in other a few divisions are approximately same. They do not include any physical export of goods. If that they sell goods to EPZ area and if they will get paid in dollars, this can be termed as foreign trade. The overall market share of Heidelberg Bare cement is 13%. The industry saturated. Nonetheless they have probability to gather even more market share on the market.
They are facing some limitation because they are international company. They may have 3 types of customers: 1 ) Dealers installment payments on your Corporate clients (e. g. developers, contractors) 3. Federal government projects (e. g. Mohakhali Flyover, Lalon Shah Connection, Karnafuli Bridge, Banani Bridge) Except these they have really few stores who are incredibly close to them. But usually they do not manage retailers. Collection Procedure: Checks/pay order: Most of the time, they obtain payments through checks. Additionally, they receive obligations by pay out order which can be very limited. Generally, they do not enable any other means of payments.
They will don’t have any funds transaction. Collection Points, Concentration Banks, Deposit banks, Locking mechanism Box: You will find collection details. The customers pay through the community branches of Dhaka Financial institution, Dutch Bangla Bank and Marcentile Financial institution. These banking companies work as collection points. Mainly because these local banking companies have lots of branches in Bangladesh it assists a lot in collection method. Through the online banking program the money coming from these local Banks can be accessible from the principal part. Then Heidelberg cement gathers money via these banks and lodged in the Standard Charted Financial institution and Citi N.
A bank. 95% of accumulated money can be deposited in Standard Charted Bank and rest of the five per cent is lodged in Metropolis N. A. bank are. Here Regular Charted Financial institution and Citi N. A. bank are used as focus banks. They transfer the money from the collection bank at the conclusion of the month whether the cash is gathered at 1st week from the month. Mainly because they have enough money in side they are sluggish to copy the money in concentration banking institutions. But they are extremely efficient in collecting the bucks from clients in due date. Because of having no lockbox system in Bangladesh, they just do not use lockbox system.
Since there group policy they may have restriction in depositing money in local financial institutions. The local banks are usually accountable for collecting payments. Cost: In standard chartered and Citi N. A the service charge is usually little more than the assistance charge taken by other banking companies. Banks are responsible for releasing payments, controlling LC, payment of income etc . There exists very low risk, because that they follow some strict regulations like: ¢They do not give dealership without bank guarantee. ¢They stick to conservative credit policy. ¢They encourage money sales. With an average all their credit term is of 18-20 days.
In government tasks their credit term is usually flexible. Cash Disbursement Method: Suppliers: You will discover mainly two groups who also receive money from the Heidelberg cement. One is the Raw materials suppliers after which another is definitely the suppliers of various utilities. The raw materials suppliers are mostly the part of Heidelberg Group. Generally they take unprocessed trash from Indo Cement, Philippines, Heidelberg Cement, India and Heidelberg Concrete, Japan. Payment Methods, Payment Banks: They can be mainly importing raw materials. So they spend through LC. They do not include any money payments.
That they pay through Standard Charted Bank. The typical Charted Lender works as disbursement bank and processes each of the formalities. Sometimes Citi D. A also works as a payment bank. Authorization: They adhere to centralized Payment policy. All checks will be signed inside the Head one fourth. Payments are made through mainly financing department. If the payment is no more than $6 million, it needs the joint personal unsecured of head of financial department and in group W consist of three directors from their store any one need to sign. But once payments surpass $6 , 000, 000 it needs joint signature of finance department and Administrator Director.
Float: Although straight they do not take those help of suspended, sometimes they will try to write check on Wednesday/Thursday. As a result, obligations can not be used in suppliers Financial institutions before Weekend. In immediately they are taking advantage of inefficient banking program in Bangladesh. Credit Coverage: Normally there is a conservative credit policy. They may be not willing to flexible all their credit plans to increase their very own sales , revenue. They cannot provide clean credit insurance plan, because like a MNC they can collect repayments by pressure. Also they have to maintain several Government rules and regulations.
They usually emphasize on top quality, as a result they will maintain high grade price. They need to go by what the law states. That’s why they can be not trading that much in A/R. They may be not ready to increase the risk. When collecting payments, they provide two alerts after going above the borrowing limit. If they will fail to acquire payment irrespective of these, then they realize the lender guarantee. They offer up to 62 =>, times of credit limit to Government Tasks, 30 days to corporate consumers. But they maintain more tight credit plan to the retailers, because of trustworthiness. They give credit to the traders only if they will give traditional bank guarantee.
Simply to the distinguished developer’s they will sale in credit. They have credit term on average of 18-20 days. Working Capital Requirements: They are incredibly efficient in cash managing. That is why they have enough cash to fund working capital. As well they have enormous idle cash. They cannot pay in all helpings of money in banks. As a result, they fund the working capital requirements by simply internal options. Sometimes additionally they take loan from the subsidiaries of Heidelberg group. They took loan from Meghna Energy Limited which is the subsidiary of Heidelberg group too. Although at resent (2009-2010) they may be not acquiring any short term loan. As they are multinational company they can not remit profit parent firm without the accompanied by a dividends. Therefore every year they are having large retained earnings in their accounts. With that money they are auto financing their temporary needs. As well as the help of advanced softwares that were there become more successful in taking care of the business. They are remitting funds as specialized know how fees which is 3% of preceding years net sales. Heidelberg group assists a lot to all their subsidiary when it comes to technology, encounter etc .
As they are more in a position of inner financing in 2008 they will don’t have any long term loans. Collection Method (#9): HCBL has some Paper information flow placed on invoice. This attachment contains the Order size, order simply no, time of delivery and the particular date of repayment. The payment is made to the gathering Bank and the dealers find the receipt from the bank. Since the checks will be account paye checks, to enable them to easily trail which consumer paid the payment. The business by the time get knows about the payment simply by ERP computer software which is connected with Banks.
Your bank process the payment system and it takes a little time for the corporation to get notified and deposited mainly because all get together are linked through ENTERPRISE RESOURCE PLANNING software. Lender processing charges are the price involved in this method. If the repayment is not really made by the dealers that they realized the financial institution guarantee following giving two warnings. Quite simply Credit insurance plan for Federal government projects will be flexible than the usual customers. Electronic digital Method for Controlling HCBL: ENTERPRISE RESOURCE PLANNING: Heidelberg Bare cement Bangladesh Ltd. (HCBL) how to use Enterprise app software called Enterprise Reference Planning(ERP) that includes a market price of almost Tk. 0, 000, 000-Tk. 30, 1000, 000 (2-3 crore TK. ). They have this application in one sense free primarily. But they are paying off these fees as “technical r knowhow fees in every single year which is 3% of prior years net desenfado. This computer software Provide a sole information system for organization-wide coordination and integration of key organization processes. This really is a competitive advantage for Heidelberg cement. ERP connects almost all key business process (e. g. , manufacturing and production, accounting and finance, human resources, product sales and marketing) and attaches the suppliers , Sellers together in a single place.
At this time all department can talk about information which usually helps business increase efficiency or evaluates their result. 1 . ENTERPRISE RESOURCE PLANNING also allows to Buying equipment, planning inventory, mailing them to sites, activating these people followed by regimen maintenance is actually a chain of daunting duties. If there is a missing hyperlink in this incredibly complex method, they will be out of business in the very competitive market. Earlier it was a little while until nearly 30 mins to generate a purchase order but now it will require a few seconds. The entire process is flawless and tamperproof as a robust computer controls that centrally.
Heidelberg Cement provides deployed two such servers in different spots to ensure that a single takes over in the event that the other computer fails. They can observe every employee’s output and assess all of them accordingly. It perfects the evaluation technique of the company’s human being capital. By utilizing ERP, Productivity of Heidelberg’s employees increased 99 percent. ERP increase profit and minimize costs, while providing superior service to its consumers. Advantages of ENTERPRISE RESOURCE PLANNING: ¢ERP is definitely software which will integrates all functionalities in the organization within a database.
It streamlines each of the business processes and gives desired result on a click of a button. ¢ERP software incorporates a large amount of market specific business functionalities which will ensure much less customization or perhaps sometime not any customization (except reports) to make the package suitable to your business operations. ¢Most important advantage of ERP software is integration of all of the business option in a single program, which decreases unnecessary paper work, documentation, repeated entry, cycle period etc . The software program also includes its construction of updates to changing technologies. Inside the ERP software business functionalities and functioning processes are made into regular software codes, thus this require reduced time to appreciate process related issue of implementation and provide industry particular best practices. ¢ERP can be useful is order monitoring. When a business receives purchases for a item, being able to effectively track the orders enables the company to get thorough information on their customers and marketing plans. If different software packages are being used, this data may not be regular. ¢ERP application automates the organization processes and in addition forces its own logic (industry specific) around the business. Accounting applications is yet another advantage of ERP. It can combine the being, profit, and revenue details of product sales that are made etc . Other Advantages: ¢Speeding the whole developing process ¢Better and methodical inventory controlling with HURUF analysis ¢WIP (work in progress) control ¢Easy task management ¢Accessing the position of the items on a click of a button ¢Fast transmit commodities through online transactions ¢Fastens the creation of reports ¢Reduce paper works and repeated admittance ¢Quick finalizing of information ¢Serving the customer effectively in time ¢Solve the customer trouble quickly Details based decision ¢Better financial reports ¢Better supply chain management ¢Better vendor management ¢Reduce procedure cycle period Disadvantages of ERP: ¢Perhaps one of the biggest down sides to this technology is the price. As the business is a great MNC that they get this computer software for free. They are paying off this kind of cost because “Technical Ideas Fees throughout the years. ¢Expert needed to run the ENTERPRISE RESOURCE PLANNING system. The employees must be continually trained approach use it, and it is also important for companies to be sure the sincerity of the info is protected. The success of the machine is totally dependent on the way the workers apply it. Even if a firm has enough money to implement ENTERPRISE RESOURCE PLANNING, they may not be capable to successfully use it if they do not have enough money to coach their personnel on the technique of using it. ¢One of the biggest problems with ERP is that it is difficult to customize. Very few businesses can successfully use ENTERPRISE RESOURCE PLANNING right out from the box. It should be modified to match their needs, and this process could be both high-priced and tedious. ¢Most ERP vendors will never allow the composition of the computer software to be changed. ERP distributors may impose additional certificate fees, locating a strain upon companies which in turn not have enough resources to fund them.
The technical support of ERP departments has been wondered, and many problems may arise because of security, seeing that corporate associates must provide sensitive data to the tech support office. ERP products on hand management: ENTERPRISE RESOURCE PLANNING inventory supervision handles everything from ordering, physical inventory count, scheduling, shipping, receiving, getting, and supply chain planning. Changes in inventory are automatically current. It no more takes hours (sometimes approximately 24) before the changes happen to be recorded. This helps inventory supervision employees of HCBL to see if a product is currently in stock.
Faster service means better customer care. HCBL ENTERPRISE RESOURCE PLANNING management uses bar unique codes to keep up with products on hand items. This will make tracking inventory much easier. As the bar-coded items leave inventory, they will get scanned and their item information is usually entered into the ERP products on hand management system. Inserting bar code labels upon stock will help HCBL reduce costs because it maintains the list of stock up-to-date. Employees can easily see when certain quantities will be low and need to be re-stocked. Customer service likewise benefits from this because businesses and consumers can see what products are immediately offered.
Advantages: ERP inventory managing has many advantages. The main advantage for a company is that the ERP method is company-wide and involves just one software system. Another advantages include: ¢Proper conversation between place to place. ¢Tracking of orders from your time the order was received to its delivery. ¢Keeping program the income cycle coming from when the account is issue through when the payment is received. ¢Provides a ‘top down’ overview of the operation of a company. ¢Reduces the risk of loss of details ¢Sets up a form of secureness to protect against thievery from outdoors or within a company.
Cons: Despite the advantages HCBL receive from using ENTERPRISE RESOURCE PLANNING inventory administration, there are also some problems with that. Most of these down sides stem via inadequately educated employees and compromised info. But you will discover other concerns that can occur from this form of system. ¢Reformatting a business for making it more compatible with a great ERP system and thus adapt it to industry specifications may cause a loss of edge over the competition. ¢By building a company-wide system that links all areas, that makes it hard to figure out liability. Problems that might arise in one area can mistakenly become blamed on a different area. Not all departments in a firm are willing to talk about information. This kind of withholding of sensitive data can interrupt the work flow. ¢ERP inventory management devices may to too complicated for the needs of any company. Cash Flow Timeline: Below we have demonstrated the cash circulation timeline of HCBL of 2006, 2007, 2008 Monetary Analysis: Monetary analysis of Heidelberg Concrete Ltd. Fluid Ratio200620072008 NWC to assets-0. 050. 010. 11 current ratio0. 871. 031. 27 quick ratio0. 480. 710. 66 cash ratio0. 060. 400. thirty-two interval measure851. 401637. 281499. 92 CCC-1. 26-17. 9936. 53 Days Inventory held57. 5256. 03103. 14 DSO37. 8037. 5635. 02 Working Cycle95. 293. 59138. 18 DPO96. 59111. 57101. 63 NWC-208822000. 0064703000. 00638679000. 00 NLB46997000. 00800973000. 00768453000. 00 CLI27. 5639. 40 Productivity Ratio Total asset turnover1. 211. 091. 08 NWC turnover-23. 9686. 889. 97 Inventory turnover6. 356. 513. 54 Day’s sales in inventory57. 5256. 03103. 14 AVG collection period37. 837. 5635. 02 Profitability rate net earnings margin0. twelve. 110. 2009 ROA0. 135. 120. one particular ROE0. 230. 220. 18 payout ratio0. 170. 230. 31 The true market value Ratio value earning ratio6. 6810. 9511. 58 Getting per share96. 92110104. eighty six From 06\ to 3 years ago their functioning cycle reduced and DPO increased significantly.
Once their DPO was elevating it does not make any problem in relation with the suppliers. Because the suppliers are mainly the subsidiary with the hiedelberg group. So they will got advantage in these years. And this is the reason why the company’s CHAOS COMPUTER CLUB decreased in 2007. In 2006 and 3 years ago the company’s CCC were unfavorable and it had been -1. twenty six and -17. 99 times respectively, that means the company does not need any kind of external loans. They were extremely efficient in managing the money. So that devoid of investing in Stocks and A/R they were proficiently running the operation. Whilst they had sufficient cash in their very own hand.
From2007-2008 the company’s Working cycle more than doubled and DPO decreased slightly. As a result in 2008 you can actually CCC increased to thirty six. 53 days. This increase was a reaction to a high Times inventory Placed (103. 14 days). In 2008 that they brought an excellent00 amount of inventory from their sister concern company from Indonesia known as Indocement. so the company require financing coming from somewhere. They have sufficient amount of money and from that liquid money the company was financing their very own operation. They don’t require any exterior financing for your time separation. They mainly depend on interior financing.
As they are subsidiary of Heidelberg group they get lots of establishments in many areas. This is their competitive advantage. By net liquid stability we can cover the working capital requirements. As past years shows that the company’s NLB is growing, so it is a fantastic sign intended for the company to perform its day by day business. For several years they were not really facing any type of liquidity issue. In 2007-2008 the CLI was raising. And it is positive number. CLI represents the money against to protect it’s the current liabilities. The CLI to get past year shows that the organization has excessive CLI, this implies the company features ample funds to cover the current bills.
The company provides a positive and a high amount of net working capital. This implies some of Industry’s Current assets were financed by the long term sources of fund. Here the company has not that much long term financial loan in 2006-2007 period in comparison to its short term loan and there have been no long term loan in 2008, that they paid off all of their long term financial loans in 2008. The Excess liquidity of the company was auto financing their daily business. From your time period of 2006 to 2008 you’re able to send current ratio has increased over the period And the industry’s quick proportion improved by 2006 to 2007.
Total asset turnover, NWC proceeds and products on hand turnover is on average much better and Day’s sales in inventory is acceptable. Average collection period is lower the industry good indication for the organization. Therefore , the efficiency level of the company is actually good. Income margin, ROA and ROE tells that, this is ideal company in cement sector. All these 3 ratios are high within the period. Payout ratio tells that the company does offer regular gross. For this business, P/E ratio is very much large compare to its industry. It has also a high EPS.
Overall, the company contains a good industry book ratios and it indicates that shareholders are very much interested to invest to this organization. It is the highest valued talk about than any other company inside the cement market. We take product sales growth price as the growth rate. Company’s growth charge, 13% is a lot lowers the industry development rate, 47. 84%. That proves that other companies are capturing the growing industry. Free income of the company is getting higher and higher day by day, therefore they have enough free money to invest and meeting current liability. HCBL’s cash flow by operation is additionally impressive.
Concerns and Recommendation: This problems and suggestions are based on the statements of year finished 2006, 3 years ago and 08. At present 2009 they have carried out some improvements. Too much nonproductive cash: They have too much nonproductive cash due to their efficiency and working capital management, conservative collection procedure and mainly they are really remitting less cash in mother or father company through dividends. We were holding keeping a lot of retained revenue in Bangladesh and not purchasing new job. Also in 2008 that were there decrease in net cash flow but because of starting balance in cash the closing harmony showed a huge number.
This shows that they experienced huge idle cash. The analysis displays the more clear picture. 200620072008Average Net funds (decrease) / increase during th eyear71, 339, 000759, 976, 000(82, 749, 000) Opening Balance19, 888, 00091, 227, 000851, 203, 500 Closing Balance91, 227, 000851, 203, 000768, 454, 500 Number of shares5, 381, 2955, 650, 3605, 650, 360 EPS97110105 TOTAL CASH READILY AVAILABLE PER SHARE16. 95150. 65136. 00 Money Dividend every share162533 Typical Net Funds Remain Following Dividend per share0. 95125. 65103. 0077 Cash Continue to be After Dividend5126276709944000581992120432354132 Net funds remain per share after EPS81857279 Cash remain following EPS435884914. 480280600406825920440997145 This research clearly shows that on an average this company stored 77 taka per share per year through this 3 years. On an average they may have sufficient cash per year 432354132 Taka. They must invest this kind of huge nonproductive fund in different value added project or when there is no any scope they can remit this money by providing more cash payouts. By giving funds dividend more they can put more value for their parent company. In 2010 they have declared that they are using their individual fund of Tk. 1260 million to expand their very own production by simply double in chittagong factory. Aggressive Marketing and Market share:
Industry is over loaded and still HCBL has possibility to increase their particular market share. Since local cement companies are growing day by day as a result of low costs. HCBL stands on high quality and value leadership. They can do more aggressive advertising to increase their sales and increase market share. Conservative Credit Policy: HCBL’s credit policy is not very flexible. That they don’t encourage credit revenue to increase all their sales. They don’t desire to increase the risk of credit. As they are MNC and face legal bindings in collecting if customers may pay. They have huge idle fund to finance their A/R but they are not this process.
In this over loaded market they may have the range to increase revenue but they are not attempting for it. They are certainly not willing to have risk. However in business you need to take risk and HIGH RISK means LARGE CHANCE OF RETURNING. They should generate more flexible credit policy to increase their sales and to gain more market share. By raising sales they will also remit more money by simply “Tech know how fee Various other Recommendations: ¢They can give even more focus on Dark red cement. They can be giving primarily focus on Check out cement. ¢They can carry out more CSR activities as they have adequate money. This kind of CSR activities will increase their particular goodwill. They will train more their maximum employees to work the ENTERPRISE RESOURCE PLANNING software to smoothing the task more. ¢They can give each of the employees the option of PROFIT SHOWING this will stimulate the employees to work hard. Secrecy of Selling price Sensitive Data: When we required the interview at April 12, 2010 from one of their employees we came to know that their EPS of 2009 is Tk. 151. 00 and money dividend would be 38%. Although board meeting held for April 13, 2010 plus the price hypersensitive information printed in DSE website by April 15, 2010. In case the employees announced this kind of information before Board meeting it’s illegal and unethical.
The employees should not post price very sensitive information independently before that published publicly. Why Not Advice About Excessive Inventory In 2008: In normal view one can recommend for 2008 that why they stocked huge inventory and which in turn cost them much less CFFO and net decrease in cash. That were there huge nonproductive balance that’s why they stocked inventory. However the real reason is opened up at 2010. Cement sector was in recession in 2008. Also Heidelberg Group faced Recession in 2008. Yet HCBL would not face virtually any recession in 2008. exactly where in this market other companies showed a massive decrease in EPS.
But they taken care of EPS of 105, which can be extraordinary. They will import RM from their sibling concern at a cheap charge. That’s why that they maintained a high EPS. The Cement sector at 08 perfectly awaited that the price of RM will go up in 2009. essential many firm stocked products on hand in 2008 also HCBL did this kind of. We can show our debate by that in 2009 many cement manufacturers EPS has increased by almost 400% and HCBL’s EPS also improved in 2009. In this saturated marketplace wvery organization can not help to make huge income than earlier year just by selling even more cement. This EPS likewise the result of stored inventory in 2008.
Therefore we did not recommend to lower inventory in 2008. Realization: HCBL is performing well in working capital management but they have enormous idle funds that’s why they are really not offering that much of emphasis in managing their capital more efficiently. As they are the subsidiary of Heidelberg group they keep maximum modern day policy of collecting and disbursing funds. They acquire many competitive advantages because Heidelberg group helps all of them a lot with technology. That they mainly operate with their sis concerns. HCBL is the leading organization in the concrete industry. Nonetheless they have to consider managing the idle money to add benefit to HCBL.