REPORT OF GROWTH AND PERFORMANCE OF CEMENT INDUSTRY IN

BANGLADESH
view with chart and images
Executive Summary
This report shows the growth and performance of cement industry in Bangladesh and other parts of
the world. For the purpose of the report the corporate websites have been used as source of
information for the listed companies and shows the activities of three listed cement company in
Bangladesh.
Chapter One portrays the definition of growth, performance and way to measure the organizational
performance. Then the chapter shows the research work of an industry. Chapter Two discusses the
objectives, methodology and limitations of the report. Chapter Three overview of cement industry in
the world and also Bangladesh. The growth and performance of three listed cement company in
Dhaka stock exchange. And their comparative analysis, common size analysis and ratio analysis.
Chapter Four draws conclusion to the report by placing some initiatives for improvement of cement
industry in Bangladesh.
The report shows that cement industry bringing substantial foreign remittance to Bangladesh and
make our economy stronger compare to other countries.
1.1 Meaning and Definition of growth
1. That which has grown or is growing; anything produced; product; consequence; effect; result.
2. The process of growing ; the gradual increase of an animal or a vegetable body ; the development
from a seed, germ, or root, to full size or maturity; increase in size, number, frequency, strength, etc.;
augmentation; advancement; production; prevalence or influence; as, the growth of trade; the growth
of power; the growth of intemperance. Idle weeds are fast in growth.
Growth: words in the definition
Advancement, Consequence, Development, Effect, Fast, Frequency, From, Full, Gradual,Growing,
Grown, Growth, Influence, Intemperance, Is, Maturity, Number, Power, Prevalence,Process, Produc
ed, Product, Production, Result, Root, Seed, Size, Strength, Development,Emergence, Growing, Incr
ease, Increment, Maturation, Ontogenesis, Ontogeny, Outgrowth,
Definition of Economic Growth
Economic Growth is an increase in the ABILITY to produce goods and services.
This type of Economic Growth is caused by:
a) More resources
b) better resources
c) better technology
Three Definitions of Economic Growth
1. Increasing our POTENTIAL OUTPUT
2. Increasing Output, and
3. Increasing Real GDP per capita
1 Increasing our POTENTIAL OUTPUT: ability to produce more
3. Increasing output or increasing Real GDP (ACHIEVING our potential)
a. achieving full employment and productive efficiency
b. causes:
(1) Producing at a minimum cost to achieve productive efficiency
(a) Not using more resources than necessary
(b) Using resources where they are best suited
(c) Using the appropriate technology
(3) Increasing Real GDP per capita
This means increasing output per person. GDP per capita is calculated by dividing output by the
population.
1.2 Definition of Business Performance
It is important for managers within organizations to identify whether the organization is achieving its
strategic objectives, to understand how others may view the organizations progress, and to be able
to assess the performance of competitors or other organizations. Performance measurement needs
to recognize both financial and non-financial measures of performance and be balanced in its
approach. Used appropriately, performance measurement systems can be the foundation of an
integrated and iterative strategic management system.
Way to measure business performance
The link between performance measurement systems and strategy the role of performance
measurement in the development of an integrated and iterative strategic management
system.
The concept of the balanced scorecard financial perspective, customer perspective,
internal business perspective and the innovation and learning perspective. Develop the
concept that the scorecard is a management system aimed at streamlining and focusing
strategy in a way that can lead to breakthrough competitive performance. Use of different,
but similar frameworks, to analyze performance in different commercial contexts.
Ratio analysis, cash flow analysis, stock market analysis and strategic financial analysis
used to critically evaluate the performance of an organization and its competitors.
The effects of accounting choice and creative accounting on financial statements (and the
analysis thereof)
Measures of financial performance return on investment, residual income and shareholder
value analysis.
Customer perspective examples; on time delivery, customer partnerships, time spent with
customer.
Internal business perspective examples; new product introduction, productivity, capacity
versus competition.
Innovation and learning perspective examples; new product lead times, employee
suggestions, staff development.
Dysfunctional aspects of performance measurement systems and the identification of ways
in which such this functionality can be addressed
1.3 Literature Review: Trend of Growth and performance of Garments Industry in Bangladesh
It would be an unjust to give all the credits to any single part (e.g., global market, Bangladesh
business community, or the government policy) for the boom of Bangladesh textile & RMG industry.
In fact, a range of internal and global factors & issues combined has caused it to happen. Bengalis
have century long history of mechanized tailoring and several thousand years of experience in hand
stitching. The aptitude and art of sewing/stitching has genetically transmitted through the females of
this land. Even today, one can hardly find a rural female adult who does not know hand stitching or
embroidery work. From long since the textile industry and garmenting have been in this very land
that has past export experience too. By exploiting the demand of the global apparel market, the local
manufacturers/exporters backed by the responsive state polices have successfully utilized the skilled
but cheap manpower resource to recover the lands lost pride, once again.
The Milestones
Ancient Bengal: Handloom had been in operation in the territory now comprising Bangladesh before
the inception of the Christian era, believe many. The history and literature contain some piecemeal
abstract information about hand loom weaving of Sulatni era in between 1000 BC to 1600 BC.
Mughal Era: The word muslin reminds the glorious days of Bengal textiles, particularly of Dhaka,
during the Mughal era and the early colonial period. Muslin is an exceptionally high quality fabric of
plain construction, woven in hand loom with finest yarn measuring up to 250 Ne. The modern cotton
spinning is able to spin cotton yarn only up to 120 Ne. Muslin and other textiles were exported in
mass scale to different parts of India, Europe, and Central & West Asia. At that time Bengal also
became the world famous silk producers because of huge sericulture concentration in Rajshahi &
Murshidabad regions. Indigenous technology based (but high accuracy oriented) manual cotton
spinning, quality katgahi silk-reeling and decorative handloom weaving were the causes of Bengalis
in textiles advantage over any Asian & European nations of the time.
Bengal muslin and other textiles boomed at that time because of the business friendly environment
created by the Mughal regime. Under the umbrella of the social security and political blessing to
business, Bengalis felt convenience to make investment in the sector and applied their inherited
talent.
British Era: In the middle of the British colonial era, the muslin technology was lost from the Bengal
due to the tyrannies of the colonial rulers and marketing agents of UK based textile industries, and
also the uneven competition with the low cost products of the mechanized textiles. Lack of political
support, states non-cooperation and lack of social initiatives (at least for lack of documentation
through literature) have deprived Bangladesh and the world from muslin.
The Singers sewing machines created new era of mechanized tailoring in the land by the end of
19th century. The colonial regime also introduced Bengal with the mechanized textile industry since
1930s. But the participation of local investors in establishing mechanized textile industry was
constrained due to break out of the World War-II and the division of India in 1947.
Pakistan Era: The supply of raw cotton from the then West Pakistan to Bangladesh opened new
avenue for developing cotton spinning industry in the then East Pakistan, where hand loom weaving
was again on the verge of revival. Mostly the non-Bengali entrepreneurs availed the scope of
establishing mechanized textile industry, which was blessed by the liberal business policies issued
by the then Pakistan government and technical cooperation extended by East Pakistan Industrial
Development Corporation (EPIDC). As a result, prior to 1971, Bangladesh had 858,000 spindles and
7,400 power looms and 375,00 operable hand looms, registering a good growth as compared to
1947 situation when the country had only 110,000 spindles and 2,700 power looms comprising 11
Textile Mills. Early 1960s was the beginning of ready-made garments manufacturing, which was
then simply an initial venture of the local investors aiming to capture a share of the domestic market
that remained under the custody of West Pakistani apparel manufacturers.
Bangladesh Era: As compared to 1972-73, todays capacity of Bangladesh Textile & RMG industry is
mammoth.
The landscape changed largely in the last 22 years. The export oriented RMG started its journey
only since 1977-78 with 6 manufacturing units. As a matter of fact, the Bangladesh Primary Textile
(PT) & RMG industry started to be a little dynamic since 1983-84 when the country started earning
some significant proceed (116.203 US $) through exporting RMG. At that time, the countrys
spinning sub-sector manufactured only 60.13 million kg of yarn and the power loom weaving
produced 109.63 million meters of fabrics and hand loom in excess of 600 million meters of finished
textiles (national assortments like sari, lungi, towel/gamcha, wrapper/chador, etc.).
Contrasting to that scenario, Bangladesh RMG industry exported in excess of US$ 8 billion in 2005-
06; the primary textile as a partner of export oriented RMGs and domestic apparel industries
produced 538 million kg yarn and 6,515 million meters of fabrics. However, the hand loom
production has declined from 630 million to 480 million meters in this period of time.
Bangladesh RMG, Textile & Accessories Industries together now;
Account for 77% of the total national export earning
Contribute 38 percent value addition of the industrial sector;
Provide some 63 percent employment in the whole industrial sector of the country.
Factors of Success & Failure of Bangladesh Textiles
The First Decade Progress: 1972-73 to 1982-83
For the development of formal textile sector, Bangladesh initially proceeded with a mindset of state-
owned entrepreneurship spirit and established Bangladesh Textile Mills Corporation (BTMC) in 1972
as a controlling organization. Except hand loom and few small industries, the all medium to large PT
industrial units were under the control of BTMC. Prior to 1981-82, BTMC activated some 74
industries by creating considerable number of new textile mills of economic size and by modernizing
and balancing the rest ones. But the corporations industry did not have any competitive edge and
survived in the local market under the tariff protection. By the end of 1981-82, BTMC produced 60.13
million kg of yarn and 109.63 million meters of fabrics, which in 1972-73 were 39.14 million kg of
yarn and 97.92 million meters of fabrics. The export oriented RMG industry that came into being in
1977-78 with 6 units in the private sector grew to 67, producing 34.62 million of pieces of garments.
The production growth of the first decade Bangladesh Textiles could not be characterized as any
thing closer to impressive, not to speak of booming.
The public sector endeavor for development of textile industry in the first decade of Bangladesh was
an aftermath of the political philosophy of production imposed by the first government of the country.
Inefficiency, corruption and strong trade unionism were the other real barriers to the potential growth
of production. Female participation was not significant in this decade.
The Second Decade Progress: 1983-84 to 1992-93
This decade provides a better feature of production and export performance as compared to the
previous time span. The growth of spinning and apparel industries was remarkable in this decade;
yarn production grew by 129% and RMG production by about 1600%. In 1992-93, Bangladesh
exported 582 million pieces of apparel (woven RMG formed the lion share) and earned foreign
nearly US $ 1.5 billion.
The success of this decade woes to the government policy that started divesting public sector since
1981-82 to original Bengali ownership. The government also allowed private sector investment for
creation of large-scale spinning and weaving industries and especially encouraged setting up export
oriented RMG. The textile policy declared in 1989 encouraged setting up of export-oriented textile
mills and instructed the financial institutes for funding such projects at rational equity- up to 30%.
Facilities such as duty draw back, back-to-back letter of credit facility for import of RMG inputs, and
bonded warehouse provisions were the other important catalytic policy incentives.
The global market, particularly the US apparel importers took interest about Bangladesh RMG
because of its protected access to US Market. Moreover, the Hong Kong based buyers and their
agents or the middlemen who did the business in Srilanka discovered Bangladesh a place better
than the war prone zone.
The countrys overall political whims by and large started favoring privatization. Labor unionism and
labor unrest was controlled in the private sector with the blessing of the government.
The business was well accepted socially; many skilled personnel switched over their professions
from public to private sector for better career and earning. As cheap workforce females were found
very suitable to form the main RMG workforce.
The Third Decade Progress: 1993-94 to 2002-03.
The inefficiency of the state owned enterprises and the impulse of the open market economy led the
government to undertake more liberalized policy since 1990-91 towards encouragement of private
sector investment in textile & RMG industries. Subsequently, the government started privatization of
the remaining mills under BTMC from 1993-94. In this decade, the tax/duty on raw cotton was made
zero. As a result, there was remarkable increase in the establishment of the state-of-the-art
technology based spinning, shuttle less weaving Knitting and more sophisticated RMG industries.
In this decade, huge yarn and fabric production capacity was created to meet the demand of export
oriented RMG industry that grew by 196%. The yarn production increased by 148% while fabric
production increased by 38 times thanks to huge demand necessitated by the rapid growing knitting
and modern shuttle less weaving.
The increasing export of RMG thanks to the speedy growth of the knit RMG necessitated huge
supply of yarn and fabrics; the RMG companies wanted to rely more on the local textile industry to
have ensured supply of yarn and fabrics in time against the short lead-time. A real boom of the
industry took place in this decade.
For the development of this decade, credit should be given to several dynamics that not only
sustained the private PT industry and the export oriented RMG industry but also caused real boom
of the sector. These are:
International Trade Treaty & Agreement
Bangladesh RMG export availed the generalized system of privilege (GSP) in the EU
countries as a member of least developing country (LDC); this was not given to its nearest
core competitors such as India, Pakistan, or Srilanka.
Quota facility in USA market was enjoyed, although that was reducing year after year.
Rules of origin also favored Bangladesh in developing own backward linkage industry.
Bangladesh Government Policy
Textile was declared as the thrust sector to extend all out cooperation to the export oriented
RMG and the backward linkage industry.
Provisions of cash incentives (initially to the extent of 25% of the export value) to the
exporters and backward supply chains by the government o f Bangladesh.
Extended bonded warehouse provisions.
Rationalized tariff on textile & garments inputs.
International Supply Chain Hong Kong based deal makers for their own business interest tried
Bangladesh RMG export to expand in the EU, USA, Australia and Canada.
Local Situational Aspects
Bangladesh by middle of this decade had already built up a sizable backward linkage capacity-
both PT & accessory industry, which similar non-fiber producing countries like Srilanka, Vietnam,
and Mauritius & other potential African countries could not develop.
Bangladesh was able to proof itself as a country having cheapest skilled work force having better
attitude than any competitors countries.
Stakeholders Associations
In the mean time, 3 strong stakeholders associations (BGMEA-Bangladesh Garments Manufacturers
& Exporters Association, BKMEA-Bangladesh Knit Manufacturers & Exporters Association and
BTMA-Bangladesh Textile Mills association) became very active for advocacy. They have kept
strong role in eradicating systemic bottlenecks and acted as efficient pressure group to undertake
policies in their favor by the government.
Sociopolitical Factors
Bangladesh political parties did not oppose mass privatization; rather many political leaders openly
or in anonymity started becoming textile Or RMG entrepreneurs. The workers union-activities were
not counter-productive as in the early Bangladesh period and females participation in the RMG &
textile industry was not strongly discouraged by the religious sector.
The Recent Progress: 2003-04 to 2005-06
It was grossly apprehended that the Bangladesh RMG business would start collapsing with the start
of GATT i.e., the Post MFA era. The researchers of GTO (Gherzi Textile Organization-a Swiss
consultancy firm) and PPMA (a Bangladesh consultancy firm) predicted that by 2008-09 the export
would reach to US$ 10 billion if reforms, suggested by them, were undertaken and implemented-
otherwise the export would gradually decline. But the actual scenario was a bit different. The
production of yarn, fabric and apparels registered increase by 58%, 39% and 47% respectively in the
last 3 years and the total export of textiles and RMG rose to in excess of US$ 8 billion.
As a matter of fact, the government has implemented some of the recommendations made by GTO
& PPMA. For example, the government has imposed more importance on activities of EPB, one-
stop-shop service has improved, port complications have reduced, bank interest in some case has
lowered down to 9% for export oriented industries; and the government, the donors (World
Bank/SEDF & UNIDO) & the stakeholders associations have jointly started revamping the training
centers/HRD institutions, extending quality support programs to improve quality, cooperating to
strengthen accreditation and compliance issues, etc.
On the other hand, the outbreak of SAARS virus in China & Hong Kong, war in Srilanka &
Afghanistan, and the tensions in between India & Pakistan etc. have pushed many buyers to come
Bangladesh, a comparatively a better place enriched with long RMG experience and built up
backward supply industry.
Finally, low cost of captive power generation and cheap labour (as shown below) in Bangladesh do
really mater in a RMG business- that well understands the buyers or their agents who once did the
business in this country. Together with all this, the continuation of the GSP support by the EU up to
2015 has caused buyers to rethink about Bangladesh once again. This is why in the recent time FDI
(foreign direct investment) has happened in the textile & RMG sector.
SWOT Analysis of Bangladesh Textiles & RMG Industry
Strength
Advantage over China, Pakistan & India
Adequate supply of labour force of both sexes, attributed with less attitudes problem (less
absenteeism and, aptitude for learning, and loyal) and high morale
Cheaper labour cost
Low cost of captive power generation using gas as fuel
GSP facility up to 2015
Weakness
Bangladesh produce mostly basic products- which are low cost items; the share of fashion products
i.e., high value
added product is very low.
Bangladesh does not produce the basic raw materials (only a negligible quantity of cotton
but no manufactured fiber) and as such has to depend totally on sensitive global market.
Because of inadequate backward linkage, lead-time happens to be long, nearly 3 months.
Public power supply is erratic.
Bank interest rate is still high enough, particularly of private sector bank, for investment of
export oriented high value
HRD facility, productivity and quality support, testing and accreditation support, design
support and compliances are yet to be enhanced.
Cost of doing business is high because of under table money
Opportunity
Bangladesh has now a scope to go for more fashion oriented products deserving high price
in the global market.
With the help of further increase of productivity & quality and design support, Bangladesh
can minimize cost and maximize profit and export value.
Bangladesh, as a proven experienced RMG & Textile manufacturer, can expand share in the
existing market (USA, EU, Australia, Canada, etc.) and can also explore opportunity in Japan
& CIS countries.
In the long run, Bangladesh has a scope to target huge populated country like China and
India- where demand as well as cost of manufacturing will be wider.
Threat
Unless new strong market is explored in home or abroad, any non-cooperation from USA &
EU may jeopardize the whole Bangladesh RMG export business and consequently the
textile manufacturing.
Sudden price hike of cotton and yarn in the global market may push Bangladesh to a very
awkward situation to devastate the business.
The type of labour and political anarchies of the recent days if prevails in the future,
Bangladesh may lose the business in the way Srilanka has lost.
Growing terrorism, or its false/amplified propaganda, is also a big threat.
Scope of further Boom
The Demand-Supply Gap
The growth of domestic consumption depends upon a set of complex factors that include among
others, the growth of population, per capita income, growth of foreign exchange remittance, change
of tastes etc. Some of these are not well graspable factors for future demand estimation through
dependable prediction models. Similar is the case with the export-oriented RMG growth, which is
more complicated as access to international market depends not only upon the scale of demand or
competitiveness but also on global trade policies, regional treaties, bilateral relations, non-tariff
barriers, image of exporters, etc.
The major factors, which influence the growth of Bangladesh PTS are:
Domestic Consumption of apparels, home textiles and technical textiles.
Growth of RMG export from Bangladesh and direct export of various textile products
(finished fabrics, saris, lungis, etc.)
Importing countries market characterizations, which is highly influenced by demand trend,
visible and invisible regional factors and bilateral or multilateral trade pacts.
Domestic factors of production (cost of production, local export enabling factors, etc.) and
sociopolitical issues
Earlier a common misapprehension existed among the most people that Bangladesh export-oriented
RMG would face a sort of catastrophe in the Post-MFA era due to implementation of WTO (complete
abolishment of MFA i.e., withdrawal of quota from USA), marginalization of cash incentives and
impacts of various regional blocks and Free-Trade Agreement (FTA). Firstly, EU has extended duty
free access of apparel, which will exist until 2015. On the other hand, now it is understood that the
abolishment of quota will initially retard the growth of woven RMG mainly due to loss of control over
quota distribution by some local large RMG quota dealers; but this is creating better opportunity for
the real RMG manufacturers (not the quota sellers) to compete with more cost advantage in the US
market in the near future. For knit RMG export, so far nothing happened to be panic; the growth has
rather enhanced in the recent period despite a little price fall. In fact, except China there are a few
countries those have PT industry and enough RMG experience to throw Bangladesh out of
competition from US and UK markets. Bangladesh RMG has to scare for the dangers that have
correctly been anticipated so far, but there is no valid reason for being disappointed.
Anticipation of the demand, therefore, could be done based on Naive (Time Series) model of
forecasting reinforced by forecasting methods based on behavioral dimensions, which depends on
historical data and intuitive assumptions made by experts having long presence in the sector. So, we
can have a look on the MOT&Js recent projection style for of forecasting the demand-production
gaps of yarn and fabrics by 2009-10. The projection estimates the demand of fabrics and yarns
based on two-tire demand models: in the short-term and in the long-term perspectives. The later
model indicates that total demands will comprise 9,115 million meters of fabrics & 1,519 million kg of
yarn in 2009-10, of which 2,475 million meters of fabrics for domestic consumption and 6,640 million
meters for consumption of export-oriented RMG industry.
Prospect for Creation of New Capacity in Different Sub-sectors of Textile Industry
the potentiality of the industrial sector could be anticipated based on the demand-production gaps of
yarn and fabrics by 2009-10.
Conclusions
Bangladesh PT industry now lives in a demand driven expanding market thanks to the boom of
export-oriented RMG industry that has developed a global network for export of apparels mostly to
USA, EU, Canada, Australia and many other countries of the world. In addition, Bangladesh is also
exporting home textiles (furnishing fabrics and other household goods made of textile fabrics), the
demand of which is increasing in the overseas market.
In order to make further boom, Bangladesh has to create new capacities and modernize & balance
the existing ones. Encouragement of FDI from ethnic Bengalis in foreign countries would be one of
the best options for the needed financing in addition to the local banks efforts. Power supply has to
be ensured.
Bangladesh needs to develop capacities to provide the industries with a sustainable supply of
resource personnel and support services in regard of research, design, testing & standardization,
accreditation, compliances, etc.
Bangladesh has to improve the port efficiency further and gear up domestic transportation. Labour
crisis, labour safety, social rights and gender issues have to be dealt with more efficacious. It is
important that the buyers should have a preferred access to the country; starting from reception on
arrival to facilities such as hotel/rest house, tourism and recreation should be improved.
Side by side exploring new markets in abroad, Bangladesh needs to undertake long-term
comprehensive policies to create a strong domestic and regional market for RMGs and finished
textiles, especially targeting China & India. On the other hand, to shorten the lead-time Bangladesh
need to have a strong backward supply chain that in turns demand sustainable supply of textile
fibers. Bangladesh either has to produce cotton and manufactured fibers or should make a long-term
cont-actual arrangement with some preferred fiber supplier countries. For all this, a comprehensive
policy is now to be formulated without further loss of time.
Cement industry in Bangladesh
Cement industry in Bangladesh is not very old industry. Producing cement and establishment of
cement factory started from 1992.Athough it has done well in its sector.
2.1 Objectives:
Cement industry is a blooming sector in Bangladesh.This report on cement industry has following
objectives:
to know the growth and performance of cement industry in Bangladesh
To compare the position of Bangladesh in cement industry with other countries cement industry in
the world
how to become the cement industry a source of foreign money
To make our economy be strong by developing cement industry.
To encourage all to invest their money in this sector
2.2 Methodology
The source of data of the reporter as followings:
The internet.
The websites of Cement industry ,Dhaka stock exchange, Bangladesh bank
To collect annual report- 2009 of cement industry
A publication of Bangladesh economic review 2009
Findings & Solutions
3.1 Overview of cement industry in the world
3.1.1 Cement industry in Chaina
Cement Production
China is, by far, the worlds largest cement producer with an estimated production of over 570 million
tons in 2000.Per capita cement output has reached 448 kg, which is about 200 kg higher than the
world average. At the founding of the Peoples Republic of China in 1949, total national production
was only 660,000 tons per year. By 1985, China had become the worlds leading producer. It has
retained the leading position for sixteen years, and now produces about 36 percent of the worlds
cement. The next three largest producers the United States, India, and Japanproduce less than
20 percent of the worlds cement combined.
Chinese planners project that cement output will increase by 3.4 percent annually during the Tenth
Five-Year Plan (20012005) and by 2.9 percent during the Eleventh Five-Year Plan (20062001).
They anticipate producing 660 million tons by 2005, 750 million tons by 2010, and 800 million tons
by 2015. .Clinker production is to increase by 10 million tons per year from 2001 to 2005. Other
forecasters suggest that China will hold production close to 2000 levels while upgrading technology
and efficiency throughout the industry.7 So far, the conservative production estimates seem more
likely.
Cement Products and Quality
China produces several strength grades of cement including #325, #425, #525, and #625. General
types include silicate cement, general silicate cement, slag silicate cement, volcanic ash silicate
cement, powdered coal silicate cement, and compound silicate cement. Special types include oil well
cement, medium-low heat cement (dam cement), fast solid cement, antisulfate.
Overall, Chinese cement is not of particularly high quality. This can be attributed to the widespread
use of vertical kilns. According to 1997 data, only about 10 percent of production was high-grade
#525 cement. Medium quality #425 cement makes up 62.7 percent of Chinese production and low-
grade #325 cement makes up the remainder. There are surpluses and low prices for low-quality
cement, and shortages and higher prices for higher-quality cements.
3.1.2 Cement industry in INDIA
Exports
Indian cement accounts for not more than 0.2 per cent of total world cement exports. The sector is
relatively insulated from international markets. Given the bulky nature of the commodity and the
inadequacy of transport infrastructure in the country, international trade has been limited to
neighbouring states in small quantities. Even that miniscule volume of exports took a beating after
the south-east Asian crisis, though the situation has improved gradually and the export figures
(including clinker) have touched 9 million tonnes in 2003-04 (Table 5).
Exports have been mostly restricted to those large companies that own jetties. Companies like
Gujarat Ambuja and L&T have been major exporters, who export mainly to get incentives like duty-
free import of high grade coal and
3.3.3 Cement industry in Pakistan
The industry comprises of 29 firms (19 units in the north and 10 units in the south), with the installed
production capacity of 44.09 million tons. The norths with installed production capacity of 35.18
million tons (80 percent) while the south with installed production capacity of 8.89 million tons (20
percent), compete for the domestic market of over 19 million tons. There are four foreign companies,
three armed forces companies and 16 private companies listed in the stock exchanges. The industry
is divided into two broad regions, the northern region and the southern region. The northern region
has around 80 percent share in total cement dispatches while the units based in the southern region
contributes 20 percent to the annual cement sales.
Fiscal Performance 2008-09
Business Recorder reported that Pakistans cement exports witnessed a healthy growth of 65%, to
over 6 million tons during 7 months of the current fiscal year mainly due to rise in international
demand. The exports may reach to 11 million tons and earn approx $ 700 million during 2008-09.
The statistics of All Pakistan Cement Manufacturers Association also showed that cement exports
had mounted to over 6 million tons in 7 months as compared to 3.62 million tons of same period of
last fiscal year, depicting an increase of 2.38 million tons. Cement exports during January 2009 went
up by 30% to 0.81 million tons as compared to 0.623 million tons in January 2008.
However, slow construction activities in the country during the period badly upset domestic sale of
cement, which depicted decline of 15%, to 10.77 million tons as compared to 12.59 million tons of
last fiscal year.
By September 2009, after witnessing substantial growth in all three quarters of fiscal year (FY) 2008-
09, cement sector concluded the fourth quarter with a handsome growth of 1,492 percent on yearly
basis, All Pakistan Cement Manufacturers Associations report revealed on 29th September 2009.
Higher retention prices (up 59 percent) and high rupee based export sales amid rupee depreciation
(20 percent) drove profits up north. However, this growth is magnified, as FY2007-08 was an
abnormally low profit period for the sector.
Table 5: Exports of Cement (in million tonnes)
Year Cement Clinker Total
2001-02 3.4 1.8 5.1
2002-03 3.5 3.5 6.9
2003-04 3.4 5.6 9.0
2004-05 3.3 4.8 8.1
2005-06 6.0 - -
Source: Economic Survey 2005-06, GoI and CMA
Moreover, the performance is skewed towards large players with export potential as profitable
companies in both years posted increase of just 109 percent, said analyst at JS Research Atif Zafar.
He said that cumulative profitability of companies in FY09 stood at Rs 6.2 billion or $78.2 million as
compared to Rs 386 million or $6.2 million depicting a massive growth of 1,492 percent. Companies
with profits in both the years posted 109 percent earnings improvement.
Though total dispatches were down 2 percent, net sales grew by 55 percent to Rs 101.4 billion or
$1.3 billion on the back of higher net retention prices (up 59 percent) and improved export based
revenues. Cost of sales ton also rose by 33 percent on yearly basis amid higher realized coal prices
and inflationary pressures, the analyst maintained.
Production Capacity
In Pakistan, there are 29 cement manufacturers that are playing a vital role in the building up the
countrys economy and contribution towards growth and prosperity. After 2002-3, most of the cement
manufacturers expanded their operations, and increased production. This sector has invested about
$1.5 billion in capacity expansion over the last six years.
The operating capacity of cement in 1991 was 7 million tons, which increased to become 18 million
tons by 2005-06 and by end of 2007 rose to above 37 million tones, and currently the production
capacity is 44.07 million tones.
Cement production capacity in the north is 35.18 million tons (80 percent) while in the south it is only
8.89 million tons (20 percent).
The cement manufacturers in 2007-08 added above eight million tons to the capacity and the total
production was expected to exceed 45 million tons by the end of 2010. It may result in a supply glut
of seven million tons in 2009 and 2010.
Actual Cement Production (in million tons)
According to Government Board of Investment,
2001-02 9.83
2002-03 10.85
2003-04 12.86
2004-05 16.09
2005-06 18.48
2006-07 22.73
2007-08 26.75
2008-09 20.28
History of Cement Industry in Bangladesh
Cement is the latest addition in the list of export commodities in Bangladesh. Our country started
exporting cement from January 2003. Earlier, apart from some production of state-owned Chatak
Cement Factory, the country was dependent on its import. In this context, local investors took the
initiative for setting up cement factories and starts producing cement in 1992. The production in eight
private factories stood 34 lakh tons in 1997, So far, about 100 Factories got governments approval
of which 56 factories are on production with a production capacity of 1.30 crore metric tons against a
domestic demand of 60 lakh tons in a year.
Beyond the border
Research shows that there is a 12 percent increase in domestic demand of cement every year. But
the investors cannot rely on only the domestic demand of the cement. They have to look for markets
abroad. It is understood that there is no way to get the market abroad without producing international
standard quality cement.
Aramit Cement
The company has completed a very successful year of commercial operation. During the period, the
Company sold out its product Camel Brand Cement both in local market and export to India.
Management of the Company made tremendous effort to popularize the Brand both in local and
export market overcoming all setbacks and unstable conditions prevailing thereat.
On the other hand, price of raw materials in the world market was lower as compared to last year
which had helped to reduce the production cost of the cement. In this circumstances, the company
to keep the price of the product within affordable limit that helped to increase sales revenue resulting
achieving stronger position to complete with other giants in this sector and also helped to earn net
profit (after tax) amounting to Tk.60,685,253 which is much higher compared to last years profit.
Production
During the year the Company was able to produce a total of 162,445 metric tons of cement, which
was 77.35% of installed capacity as against 136,713 metric tons in 2008 which showed 19%
increase compared to last year. In fact, production largely depends on demand and it could have
been increased in demand of cement in the market was more. However, achievement of production
is appreciable in respect of capacity of machinery and present requirement of local market.
Productions of the last five years have been summarized in the following table:
Comparative Statement of Production
Particulars 2009 2008 2007 2006 2005
Installed Capacity (in metric tons)210, 000210, 000210, 000210, 000210, 000
Actual Production (in metric tons) 162,445 136,731 127,581 138,248 119,383
Capacity Utilization (in %) 77 65 61 66 57
It appears from the above that production of cement has been increasing gradually from the year
2005 to 2009 and slightly decreased in the year 2007, which reflects gradual improvement of
production performance of the Company.
Sales
During the year under review total sales comes to 162,445 metric tons of cement as against 136,731
metric tons in 2008. Accordingly, net turnover in 2009 stands at Tk. 843.84 million against Tk.
762.61 million in 2008. Sales activities were accomplished through dealers and large number of non-
dealers throughout the country during the year under review. Moreover, the Company exported
16,610 metric tons of cement to India during the year against 17,945 metric tons in last year. The
company has arranged Indian dealer conference both in Agartala India and Coxs Bazar to explore
the export market.
Financial Performance
Financial performance of the Company during the year 2009 along with previous years is briefly
summarized below:
Particulars 2009 Taka 2008 Taka 2007 Taka 2006 Taka 2005 Taka
Net sales 843,836,356 762,612,203597,500,927561,102,750457,558,571
Gross profit/ (loss) 194, 767,41258, 540,578 72,948,414 47,811,209 610,823
Trading profit/ (loss) 163,092,343 31,688,961 54,702,446 33,295,240 (11,868,094)
Profit/ (loss) before income tax103,377,053 12,012,618 30,516,878 14,921,807 (26,840,998)
Provision for income tax 42,691,800 9,600,000 16,500,000 7,950,000 -
Profit/ (loss) after income tax 60,685,253 2,412,618 14,016,878 6,971,807 (26,640,998)
Proposed dividend 16,800,000 - 6,000,000 - -
Contribution to the National Exchequer
The Company contributed an amount of Tk 192,035,302 to the National Exchequer in the form of
Customs Duty. Value Added Tax (VAT) and Advance Income Tax deducted at source during the
year under review. Contributions to the national exchequer made under various heads during the
last five years have been mentioned below:
Contribution to the National Exchequer
Particulars 2009 Taka 2008 Taka 2007 Taka 2006 Taka 2005 Taka
Value Added Tax 128,785,590128,250,859 95,143,766 87,809,441 67,832,435
Duties at impost stage 48,851,621 46,414,898 41,696,758 54,869835 44,361,711
Advance Income Tax Adjustable/
Refundable
14,398,091 15, 838,757 4,200,000 2,641,629 1,201,679
Total 192,035,302190,504, 514141,040,524145,320,905113,395,825
Dividend
The company could not pay any dividend to the honorable shareholders due to insufficient profit
earning in the last year. During the year under report the Board of Directors has recommended 12%
cash dividend out of the profit for the year ended on 31
st
December, 2009. The amount of dividend to
be paid to the shareholders will stand at Tk. 1.68 crore.
Current Years Activities
It may be pointed out that the prices of clinker and other raw materials has gone up by 10-15 US
Dollar per Mt. Therefore, with the same volume of production and sales, profitability as that of last
year can not be sustained Considering the present pace of infrastructural development in the
country, the demand for cement has increased considerably as compared to last year and
accordingly the Company has planned to produce and sell 2 lakhs Mt of cement this year utilizing
about 95% of its installed capacity in order to increase profitability and improve the overall
performance of the Company.
Welfare activities extended to employees
1. Picnic: The management, officers, staff and workers of the Company are enjoying picnic
once in every two years. Annual cultural program is held in the picnic spot.
2. Haj program: One person from the permanent employees of he group (whose age is 40 and
above) is sent to perform Holly Haj once in every year by selection through lottery of the cost
of Company.
Corporate Social Responsibility
1. Blood donation: The managers, officers, staff and workers of the Company donate blood
once in a year to the Sandani infactory premises.
2. Relief distribution: As the part of Corporate Social Responsibility, the Company distributed
blankets and warm cloths in winter season to the distressed and winter affected people. In
rainy season relief is also distributed to the flood affected people of various areas of the
country.
Comparative Analysis
Key operating and financial data of last five years have been presented below in summarized form:
Particulars 2009 Taka 2008 Taka 2007 Taka 2006 Taka 2005 Taka
Net sales 843,836,346 762,612,203 597,500,92 7 561,102,750 457,558,571
Cost of goods sold 649,068,944 704,071,625 524,552,513 513,291,541 456,947,748
Gross profit/floss) 1 94,767,41 2 58,540,578 72,948,414 47,811,209 610,823
Operating expenses 31,675,069 26,861,617 18,245,968 14,515,969 12,478,917
Trading profit/floss) 163,092,3-3 31,688,961 54,702,446 33,295,240 (11,868,094)
Financial expenses 4 1, 9/7, 143 24,454,370 25,924,996 19,496,976 14,881,458
Other income/charges)
operating (net)
7,702,760 5,385,612 3,345,580 1,908,901 108,554
Contribution @ 5% to 5,440,897 607,585 1,606,152 785,358 __
WPP & WF
Profit/(loss) before income
tax
103,377,053 12,012,618 30,516,878 14,921,807 (26,640,998)
Provision for income tax 42,691,800 9,600,000 16,500,000 7,950,000
Profit/(loss) after income
tax
60,685,253 2,412,618 14,016,878 6,971 ,807 (26,640,998)
Transferred from Tax
holiday reserve
41,000,000 .
Dividend 16,800,000 6,000,000
(Loss) balance to date (99,155,037) (174,040,290) (176,452,90) (184,469,786)(191,441,593)
Total fixed assets &
properties
349,982,716 347,658,121 318,143,881 315,084,118 309,376,576
Total current assets &
properties
368,889,041 306,178,916 200,542,971 150,168,808 118,037,786
Total current liabilities 540,917,308 518,342,101 422,423,826 343,833,723 274,693,852
Total non current liabilities111, 109,486 112,535,226 75,715,934 108,888,989 147,162,103
Current ratio 0.68 0.59 0.47 0.44 0.43
Shareholders equity 66,844,963 22,959,710 20,547,092 12,530,214 5,558,407
Earning / (loss) per share
(basic)
43.35 1.72 10.01 4,98 (19.03)
Dividend per share 12.00 7.50
Quoted price per share
( year end ) DSE & CSE
565.25&571.251 77.50
&180.00
150.74&154.0073.25 & 76.0040.00 & 40.00
Comparative Analysis
Comparative (Taka in 000)
Particulars 2009 2008 2007 2006 2005
Authorized capital 500,000 500,00 500,000 500,00 500,000
Paid-up capital 209,000 190,000 190,000 190,000 190,000
Shareholders equity 1,870,099628,290 685,249 661,065 619,933
Tangible fixed assets 1,678,957590,057 564,885 580,334 570,818
Net current assets 191,142 38,288 121,405 91,232 53,536
Sales -local 1,139,9921,091,381 1,008,224886,093 581,458
Sales- Export 74,343 138,506 94,191 64,409 104,255
Gross profit 228,698 23,712 129,672 106,058 65,069
Operating profit/ (loss) 175,905 (39,557) 75,665 59,433 17,106
Net profit/ (loss) before tax 197,900 (28,459) 78,784 62,332 20,814
Net profit/ (loss) after tax 143,400 (28,459) 52,684 41,132 20,814
Cumulative surplus 7,935 (22,765) 5,693 1,509 1,377
No. of shares 2,090,0001,900,000 1,900,0001,900,0001,900,000
Shareholders equity per shareTk 895 Tk 331 Tk 361 Tk 333 Tk 326
Earning per share Tk 68.61 Tk (14.98)Tk 27.73 Tk 21.65 Tk 10.95
Cash dividend 10% - 15% 15% 15%
Stock dividend 10% 10% - - -
Management information
2009 2008
a. Liquidity and Solvency Ratio:
1. Current ratio
2. Quick ratio
3. Debit/Equity ration
4. Interest coverage ratio
1.42:010.79:1
-
22.97
1.07:10.56 : 1
0.01 :1
-
b.Profitability Ratio:
1. Gross profit to sales
2. Net profit to sales
3. Net profit to capital employed
4. Return on equity
5. Price earning ratio
18.83%11.81%
10.58%
15.84%
20.56
1.93%(2.31%)
(4.52%)
(4.33%)
-
c. Manpower position:
Managers & OfficersStaffs
Workers
78247
84
409
73221
70
364
Performance
The Company made considerable progress during the year. During the year under review the
company achieved net profit of (after tax deduction) Tk. 143.40 crore against loss of Tk. 2.84 crore in
2008. The sales value in the year 2009 is lower than 1.26% than the previous year 2008 and the
sales quantity in the 2009 is 7.05% higher than the year 2008. The overall achievement was made
possible through efficient management, cost reduction, proper planning of raw materials
procurement & handling shipment schedule.
Production
In spite of the hard realities the company managed to achieve satisfactory performance in respect of
production and sales due to the efforts of all employees. The company produced 223,139 M.T
cement during 2009 as against 208, 434 M.T in 2008.
Sales
The overall sales performance in 2009 showed a steady upward trend. During the year Taka in sales
volume is lower than 1.26% than the year previous 2008 and the sales quantity in the 2009 is 7.05%
higher than the year 2008.
Investment
During the year under review, the management has decide to invest in two new projects
namelyConfitex Limited and Confidence Electric Limited. Confitex Limited will set up a modern
textile mills with especially home textile, dyeing and all textile related products. The estimated cost
will be about Tk. 1,850 million. Confidence Cement Limited and its associated company Confidence
Steel Limited shall hold 50% shares equally of the said project. Confidence Electric Limited will
manufacture transformers, energy savings lamps, automotive & industrial batteries and various
electrical products. The estimated project cost will be about 1,000 million. Confidence Cement
Limited and Confidence Steel Limited will hold 49% and 51% respectively shares of Confidence
Electric Limited. Land for the above mentioned projects have already been purchased. Beside these,
the company is also managing its own portfolios through investing in listed shares for boosting
companys profitability. During the year under review the company earned profit of Tk. 2.81 crore by
operating in capital market.
Financial Results
The operating financial results of the company for the year ended 31 December, 2009 s
compared to previous year are summarized hereunder:
2009 2008
Particulars Taka Taka
Net turnover 1,214,335,7571,229,887,420
Gross profit 228,698,969 23,711,914
Net profit/ (loss) before tax197, 899,884 (28,458,932)
Provision for taxation 54,500,000 -
Net profit / (loss) after tax 143,399,884 (28,458,932)
Gross profit to turnover 18.83% 1.93%
Net profit to turnover 11.81% -
Earning per share (SPS) Tk 68.61 (Tk. 14.98)
Contribution to the National Exchequer
The company contributed total amount of Tk. 265, 097, 144 to the National Exchequer in the form of
Customs duty, VAT and Advance Income Tax under during the year.
The brea!up of these payments are sho"n in the table:
2009 2008
Govt. Revenue Taka Taka
VAT 170,998,918 163,707,177
Customs duty 71,690,571 68,490,492
Advance income tax22,407,655 26,054,337
__________ __________
Total Taka 265, 097,144258,252,006
Dividend
Considering the overall financial position of the company, the Board of Directors recommended to
pay cash dividend on the paid up capital of the Company @ 10% i,e Tk, 10 for each share of Tk 100
and stock dividend @ 20% i,e 1 bonus shares for each 5 ordinary shares for the year 2009.
Environmental Role
The world there is now increased focus on environment; accordingly the company has adopted
strategies for ensuring environment friendly atmosphere.
Bangladesh does not have any commercial deposit of limestone, the agreement provides for
uninterrupted supply of limestone to the cement plant at Chatak in Bangladesh by a 17 km long belt
conveyor from the quarry located in the state of Meghalaya. The company in Bangladesh, Lafarge
Surma Cement Ltd. wholly owns a subsidiary company Lafarge Umiam Mining Private Ltd. (LUMPL)
being registered in India, which operates its quarry at Nongtrai in Meghalaya.
Lafarge Group, with 176 years of experience, holds worlds top-ranking position in Cement,
Aggregates, Concrete and Gypsum. It operates in 78 countries with around 78,000 employees.
Lafarge in named as one of the 100 Most Sustainable Companies in the World.
The Company is already meeting about 8% of the total market need for cement and 10% of total
clinker requirements of Bangladesh market whereas the Company continues to enjoy strong growth
rates. BY supplying clinker to other cement producers in the market, the Company contributes some
USD 50-60 million per annum worth of foreign currency savings for the country. The company
contributes around BDT 1 (one) billion per annum as government revenue to the national exchequer
of Bangladesh. About 5,000 people depend on our business directly or indirectly or indirectly for their
livelihood.
The company believes that cement is an essential material that addresses vital needs of the
construction sector. The Company is very much optimistic to meet the growing needs for housing
and infrastructure in the construction sector of Bangladesh.
In economic terms, 2009 will be remembered as a year of global economic crisis. Like any other, the
construction industry suffered a significant slump, particularly in Europe and North America.
However, in contrast 2009 was a good year for the companys performance.
During the last year, your Company has shown remarkable improvement in enhancing its national
markets share. While the element industry has experienced double digit growth, the Company has
grown at double the cement market growth rate. Majority of our trade customers are operating on
cash and not credit basis, which has significantly strengthened the Companys cash flow for 2009.
The Company has continued to improve the distribution system by Opening two new depots in
Barisal and Chittagong, as well as increasing the storage capacity of existing depots to meet the
sales demand. In addition to the dedicated truck fleet, the Company has also deployed a fleet of
dedicated barges to increase the shipment of cement through the Surma River to reduce logistics
costs. All these actions have resulted in a 32% increase in dispatch volume in 2009.
Despite ongoing challenges, the Company a respectable profit in 2009. However the fact that
Company had significant amount of past accumulated loss up to the end of 2008. The Board of
Directors of the Company therefore recommended not declaring any dividend for the year 2009.
These have been done in order to the financial position of the Company and safeguard the long term
interests of the shareholders and the sustai8nable future of the Company.
Production Performance
2009 is a year of many milestones in the Companys plant performance. During 2009, main thrust
was given to implement improvement plans for wet raw materials handlings, improving reliability of
VRM and improving the quarry crusher performance.
Parameters Units20092008
Clinker Production Kt 11841022
Cement Products Kt 957 747
Clinker Dispatches Kt 536 392
Cement DispatchesKt 982 744
In 2009 the Company successfully explored the opportunity to use local companies for
manufacturing and fabrication of some critical spares, which has helped in reducing costs and
foreign exchange outflows.
Commercial Performance
During the last year, your Company has shown remarkable improvement in while cement industry
has shown double digit growth; Company has grown at double the cement market growth rate.
Majority of our trade customers are operating on cash and not credit basis, which has significantly
strengthened your Companys cash flow for 2009.
The Companys brand SUPERCRETE is now a well established brand in the market and is the most
widely available brand in any part of Bangladesh. This was only possible through launching an
efficient distribution network with focus on retail distribution. You-will be happy- has doubled the
retail distribution network in 2009, compared to the previous year. Yr Company made significant
improvements by deploying a fleet of dedicated trucks and barges and has opened new terminals in
Barisal and Chittagong, along with the existing terminals injlhaka, Noapara and Sylhet. The terminals
are operating on 24 hours basis to give better services to our valued customers.
The Company is making further improvement in the distribution system to load barges/trucks during
monsoon and to increase the dispatch capacity. This will further improve the demand/supply gap
particularly during peak seasons and monsoons.
The quality of the Companys product has been perceived by the customers as Customers
Preferred Choice due to its consistent quality. Lab testing equipments are calibrated regularly and
we have installed a web based application to record testing data on line at the ATC (Asian Technical
Center) without any human interference. This has further enhanced the integrity and reliability of our
product testing data.
The company is in constant touch with the engineers, contractors, masons and architects to
enhance our brand equity through face to face interaction. The company has organized a number of
technical seminars and mason meets to demonstrate its product usage properties as well as to
share good construction practice.
Logistic Performance
The any has continued to improve the distribution system by opening two new depots in Barisal and
Chittagong, as well as. In addition to the dedicated truck fleet. The company has also deployed a
fleet of dedicated barges to increase the shipment of cement through the Surma River to reduce
logistics costs.
On clinker loading, the Company has introduced a clinker loading skirt to increase loading efficiency
and reduce clinker dust emissions during loading process. The Company will continue to implement
other efficiency and safety measures to further improve our logistics performance.
Financial Performance
Tk. 000
2009 2008
Profit before tax 1,049,829,940,982
Income tax (466,904) (305,787)
Net profit after tax 582,925 635,195
Transfer to un-appropriated profit582,925 635,195
Earnings per share 10.44 10.94
Dividend
Despite the fact that the Company has earned a consolidated EPS of Tk.17,15 in 2009, the
Company still has large accumulated loss. In order to strengthen the financial position of the
Company and safeguard the long term interests of the shareholders and the sustainable future of the
Company, the Board of Directors of the Company-did not recommend any dividend for the year
2009. )
Human Resources
The Company is emphasizing on the development of the employees to be ready to take over their
next position and ensure a long term career for them. A complimentary recruitment process is being
followed to recruit the right talent for the right position from the market. A rigorous succession
planning process has been rolled out to identify the successors for the key positions and a proper
development plan is formed for them. Retention strategies are also being designed for the
employees of the Company. Local talents are already taking over positions replacing the expatriates
in the plant and it is an on-going process.
Corporate Social Responsibility
The Company strongly believes that business is a priority but social welfare is a responsibility. This
is a key for sustainable development. Thus, it has wide ranging community development activities
around its plant at Chhatak and its quarry in Meghalaya.
The focus of this years CSR activities was Healthcare. 3few Company took important steps in this
regard. The Company has provided sanitation wares to two hundred (200) families in remote villages
near the plant at Chhatak. Your Company also provided arsenic filters to all the project affected
families to ensure access to safe drinking water.
There is also a qualified physician and a nurse available everyday to provide free medical assistance
in a medical clinic at the Community Development Center at Chhatak which has brought tremendous
relief to the Project Affected People (PAPs). They now have access to primary healthcare that
includes consultation and medicinal support. Satellite clinic sessions are also held periodically in
remote villages taking healthcare services to the doorsteps of the villagers.
Comparative Analysis:
Tk, 000
2009 2008 2007 2006
REVENUE 7,543,725 6,211,938 2,399,876 153,190
Cost of sates (5,105,542) (3,836,583) (2,284,166) (111,872)
GROSS PROFIT 2,438,183 2,375,355 115,710 41,318
General and administrative
expenses Selling and
distribution expenses Other
operating income
(376,219)
(124,949) 2,947
(359,058)
(132,022)83,759
(265,017)
(107,248)154,404
(164,350)
(35,185)
315
OPERATING PROF!T/(LOSS) 1,939,962 1,968,034 (102,151) (157,902)
Finance expenses Finance
income Contribution to
Workers Profit Participation
(897,339)
62,460(55,254)
(1,055,934)78,408
(49,526)
(1,140,954)
106,493
(553,253)
92,496
and Welfare Funds
NET PROF1T/(LOSS)
BEFORE TAX
1,049,829 940,982 (1,136,612) (618,659)
income tax (466,904) (305,787) 281,229 105,065
NET PROFIT/(LOSS) AFTER
TAX
582,925 635,195 (855,383) (513,594)
Earnings per share (Taka) 10.04 10.94 (14.73) (8.84)
Tk. 000
2009 2008 2007 2006
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 13,036,126 13,341,043 13,554,366 13,550,833
Intangible assets 8,383 11,020 14,153 17,862
Investment in subsidiaries 519,893 519 893 519,893 519,893
Loan to subsidiary company 1,129,641 -j n^n KCAi ,zh-u,ddu1,233,900 1,243,541
Deferred income tax assets - 81,767 393,811 106,315
Current assets 2,318,588 2,507,839 1,478,984 1,500,869
17,012,631 17,702,122 17,195,107 16,939,313
LIABILITIES
Shsre capita! 5,806,868 n one; ARR 5,806,868 5,806,868
Accumulated loss (1,053,857)(1,636,782) (2,271,977)(1,416,594)
Shareholders equity 4,753,011 4,170,086 3,534,891 4,390,274
NON-CURRENT LIABILITIES
Long-term debt 4,705,955 6,404,929 8,112,809 8,292,136
Deferred income tax liabilities 385,137 - _
Contribution to employee benefit 43,901 31,866 . .
Current liabilities 7,124,627 7 OQ^ ?41 5,547,407 4,256,903
TOTAL EQUITY AND LIABILITIES17,012,631 17,702,122 17,195,107 16,939,313
Common size analysis and ratio analysis of the three cement company:
Common Size Analysis:
1) Cost of goods sold to sale
Lafarge Surma Cement= .617
Confidence Cement =.8116
Aramit Cement = .769
2) Operating expense to sale
Lafarge Surma Cement = .053
Confidence Cement = 0.0363
Aramit Cement = .769
3) Gross profit to sale
Lafarge Surma Cement=.3825
Confidence Cement =.1883
Aramit Cement = .2308
4) Operating profit to sale
= Lafarge Surma Cement=.3165
Confidence Cement = .1448
Aramit Cement = 0.128
5) Net profit before tax to sale
Lafarge Surma Cement=.1938
Confidence Cement = 0.162
Aramit Cement = 0.125
6) Net profit after tax to sale
Lafarge Surma Cement=.1319
Confidence Cement = 0.1180
Aramit Cement = 0.0719
7) Non current assets to total assets:
Lafarge Surma=.8615
Cement Confidence Cement = 0.721
Aramit Cement = 0.4868
8) Current assets to total assets:
Lafarge Surma Cement=.1384
Confidence Cement = 0.2780
Aramit Cement = 0.513149
1) Liquidity ratio:
1) Net working Capital
Lafarge Surma Cement= (4806039)
Confidence Cement = 191142009
Aramit Cement = (172028267)
2) Current ratio
Lafarge Surma Cement = .325
Confidence Cement = .419
Aramit Cement = .6819
3) Acid test ratio
Lafarge Surma Cement =.0957
Confidence Cement = .692
Aramit Cement = .351
4) Turnover ratio:
5) Inventory turnover ratio
Lafarge Surma Cement =4.63times
Inventory holding period = 2.59 months
Confidence Cement = 5.940times
Inventory holding period = 2.019months
Aramit Cement = 7.400times
Inventory holding period = 1.621months
3) Debtors turnover ratio:
Lafarge Surma Cement= .710
Confidence Cement = 1.244
Aramit Cement=1.244
3) Creditors turnover ratio:
Lafarge Surma Cement = 1.197
Confidence Cement = 0.0223
Aramit Cement = 1.416
2. Capital Structure / leverage ratio
1. Debt to Equity Ratio
Lafarge Surma Cement =2.902
Confidence Cement = .747
Aramit Cement = 9.754
Coverage Ratio:
1) Interest coverage
Lafarge Surma Cement = 1.157
Confidence Cement = 2.140
Aramit Cement = 1.667
Profit Margin:
1) Gross profit margin
Lafarge Surma Cement = 32.32%
Confidence Cement = 18%
Aramit Cement = 23.081%
Net profit margin
1) Operating profit ratio
Lafarge Surma Cement = .086
Confidence Cement = .0151
Aramit Cement = .1225
1) Net profit ratio
Lafarge Surma Cement= .1319
Confidence Cement = .1180
Aramit Cement = .0719
2. Expenses Ratio
1) COGS ratio:
Lafarge Surma Cement= 61.74%
Confidence Cement = 81.16%
Aramit Cement = 76.91%
2) Operating expenses ratio:
Lafarge Surma Cement = 6.65
Confidence Cement = 3.63
Aramit Cement = 3.75
3) Administrative expenses ratio
Lafarge Surma Cement= 4.995%
Confidence Cement = 2.663
Aramit Cement = 1.698
4) Selling expenses ratio
Lafage Surma Cement= 1.656%
Confidence Cement = .974
Aramit Cement = 2.055
5) Financial expenses ratio
Lafage Surma Cement= 11.544
Confidence Cement = 6.93
Aramit Cement = 7.344
Profitability Ratios related to investments: Return investments (ROI)
1) Return on Assets (ROA)
Lafage Surma Cement= .0566
Confidence Cement=.2369
Aramit Cement = .0884
2) Return on capital employed (ROCE)
Lafage Surma Cement= .05688
Confidence Cement = .1147
Aramit Cement = .3872
Return on shareholders equity :
Lafage Surma Cement= 0.1306
Confidence Cement= .0656
Aramit Cement= 1.351
Activity ratio / Efficiency ratio
1) Inventory turnover ratio
Lafarge Surma Cement = 3.97t
Inventory holding period= 3.02m
Confidence Cement= 5.940
Inventory holding period = 2.02m
Aramit Cement = 7.402 times
Inventory holding period= 1.62 m
2) Receivable turnover ratio
Debtors turnover
Lafage Surma Cement= 13.81 times
Inventory holding period =.86months
Confidence Cement = 7.579times
Inventory holding period = 1.5months
Aramit Cement = 8.443times
Inventory holding period = 1.421months
3) Assets turnover ratio
Lafarge Surma Cement = .265times
Inventory holding period = 45.28months
Confidence Cement = 1.628t
Inventory holding period = 7.37m
Aramit Cement = 0.9456times
Inventory holding period= 12.69m
Conclusions & Recommendations
In FY 1980-81, the contribution of the board industry sector to real GDP was 17.31% which has
increased to 29.73% in FY 2008-2009.Cement industry in the new sector of industrial sector of
Bangladesh. It has passed only 18 years. The trend of growth and performance of cement industry
rapidly increase day by day during the 18 years.
The findings and solutions section of the report shows that the production, sale and investment of
the cement company increased day by day due to some barriers like increase price of raw material,
low price of cement in the world.
These industries also develop some other manufacturing company like Shoven bag manufacturing
company, Miracles, Sino Bangla. This company make woven bags by importing raw materials .It
supplies the bag in local and foreign market. Bangladesh is set to export cement bag for the first
time to India diversifying the countrys export basket. It also try to export South American countries
like Brazil and Paru.
Cement sector of Bangladesh has huge growing possibilities. The sector has grown day by day with
huge prosperity. Some actions will take to increase its success like-
Bangladesh government takes initiatives like tax and tariff free import of raw material
Provide subsidiary and easy loan for the sector
All company should huge marketing strategies for domestics and foreign investment
The cement industry will play a major role for earnings foreign remittance with the help of increasing
growth and performance and also make strong economy for our loving motherland.
http:##"""$la"yersn%urists$com#industries#report!of!gro"th!and!performance!of!cement!industry!
in!bangladesh#