Term Paper

On
Financial Performance Analysis
Of
PRAN

 Submitted To:

Faculty of Business Administration

Premier University
 Submitted By:

Date of Submission:
 LETTER OF TRANSMITTAL

Date:

To

Faculty of Business Administration

Premier University Chittagong

Subject: Submission of report on “Financial Performance Analysis of PRAN”.

Respected Sir,
This is our great pleasure to have the opportunity to submit the report on
the “ Financial Performance Analysis of PRAN ” as part of our course
studies.
The report is prepared based on visiting company, published reports,
websites and other related documents and the documents collected from
library. Through our best sincerity we have tried to uptake all the related
issues in the report within several limitations. We sincerely hope and
believe that these findings will be able to meet the requirements of the
course.
Therefore we would like to place this report for your kind judgment and
valuable suggestion.

Thanking you.
Sincerely yours
 ACKNOWLEDGEMENT

At first we are very grateful and thankful to the Almighty.

For the completion of this report visiting the company, searching for
websites, articles and related documents were required. However, it
was our
who played the important role by giving us an insight about
the report. We express our profound indebtedness and gratitude to
her, for her valuable advice that helped immensely in preparing this
report.
In addition we would also like to thank all employees of PRAN who
spent their valuable time to provide us information about their
company.
We are also thankful to our fellow students, who helped us a lot to
prepare this report.
 EXECUTIVE SUMMARY

PRAN-RFL Group is a leading food, beverage & plastic industrial

conglomerate & market leader in Bangladesh. It is one of the most
profi table companies of Bangladesh. Their mission and vision is to
eliminate poverty and develop the agricultural sector of
Bangladesh. Their motto is to generate employment and earn dignity
and self respect for our competitors. Since 1981 they are trying to develop
our countries agricultural and rural area. Besides this they are the largest
agro-processing company in Bangladesh.
This Term Paper goes on the various factors on PRAN-RFL Group. At first
discussed about their organizational overview, history, aim, mission, vision
industries, corporate office, and methodology. Information has been taken
from secondary sources like, total concern, employee, product, export list
and other topics. Here there has been thoroughly discussed about financial
condition, financial performance, Horizontal Analysis, Vertical Analysis and
Rational Analysis on Financial statement on PRAN. Here there goes
discussion on it’s Findings and Recommendations with little knowledge has
also been put to improve and flourish their business as well as to have
contribution in the national economy in this way or in a better way. In a
nutshell, a dissertation has been given from a neutral view. Finally I
summed up the whole topic and specified them to different chapters and
parts.
 TABLE OF CONTENTS

Chapter No. Name of contents Page

Title of Term Paper
Letter of Transmittal
Acknowledgement
Executive Summary
Table of Contents
Chapter 1 Introduction
1.1 Background
1.2 Objectives and Scope of the study
1.3 Methodology of the study
1.4 Limitations of the study
Chapter 2 Theoretical Aspect 28-39
3.1 SWOT Analysis 29
3.2 Marketing strategies 31
3.3 Financial condition & statement 33
3.4 Contribution to economy 36
3.5 Industries and corporate office 38
Chapter 4 Termination 40-43
4.1 Acknowledgement 41
4.2 Accolades 42
4.3 Conclusion 43
4.4 Bibliography 43
Chapter One
Introduction
Background
PRAN started its operation in 1980 as processors of fruit and vegetable in Bangladesh
and in 1981 when PRAN and RFL merge together it becomes one of the biggest business
groups in Bangladesh. PRAN RFL is currently one of the most admired food & beverages
brand among the millions of people of Bangladesh and other 77 countries of the world
where PRAN Products are regularly being exported.
PRAN RFL’s comparative advantage as an economy lies in agriculture. They believe the
way to economic prosperity is through agro-business. PRAN stands for “Programme for
Rural Advancement Nationally” and RFL stands for Rangpur foundry limited.
PRAN RFL is the pioneer in Bangladesh to be involved in contract farming and procures
raw material directly from the farmers and processes through state of the art machinery
at our several factories into hygienically packed food and drinks products. The brand
PRAN RFL has established itself in every category of food and beverage and other
industry and can boost a product range from Juices, Carbonated Drinks, Confectionery,
Snacks, and Spices, cloths and to even dairy products.
Today consumers of PRAN RFL not only value “PRAN RFL” for its authentic refreshing
juice drinks products, but also for its mouth watering quality confectionery products
with high visual appeal and exciting texture and intend to expand their presence to
every corner of the world and strive to make “PRAN RFL” a truly international brand to
be recognized globally.
Objectives and Scope of the Study
Objectives of the Study:
The broad objectives of this study are to find out financial system of PRAN group.
The specific objectives of this study are shown below:
1. To identify the present financial system of PRAN group in Bangladesh.
2. To analyze the present problems in operating marketing function of PRAN group
3. To analysize the opinion of the participants involving operating marketing
function of PRAN group.
4. SWOT analysis and future prospects of PRAN group.
5. To prescribe appropriate recommendation and suggestion to overcome existing
problems of PRAN Group.
Specially, the above objectives of this study are to know the way by which we can take
best decision regarding its product, price, distribution, and promotional activities with
the Marketing and Financial environment.

Scope of Study
The report is descriptive in nature. The study covers only various functional areas of
Human resource Department. No attempt is to perform detailed analysis effectiveness of
the department. The findings are strictly based on the information provided by
respective personnel. The concentration is on the presentation of the facts as
discovered.

Methodology of the Study

The population sampled for the study was limited to the PRAN Group where we were
assigned to perform the study.
Data collections: In order to conduct the report, I have collected necessary information
from two sources
# Secondary sources of information

Secondary sources of information

• Annual report of PRAN Group
• A brief on staff of PRAN Group
• Various document of the company
• Website of PRAN Group
Limitations of the Study
Term Paper program is a one kind of procedural program. There are involved various
factors such as time/cost/information etc. So I have to face some problem to working
this study. Mainly I have faced few problem these so much important of my study. The
companies officer are not provided sufficient current information such as information on
company existing market share, industries demands, sales volume of competitors,
accurate financial statement, cash in flow statement, rough behaviors of some
employees etc. When I have survey sample wholesalers, retailers and customers then
they have not cooperation with me.
After also I have some personal limitations such as money problem, time problem, lack
of available previous research materials due to insufficient knowledge about this
research fields through above limitation are exist. I have tried my best to overcome
these limitations in this study.
 Chapter Two
Theoretical Aspect
Definition of Financial Statement

A financial statement (or financial report) is a formal record of the financial activities and
position of a business, person, or other entity. Relevant financial information is
presented in a structured manner and in a form easy to understand.

Users of Financial Statements

Financial statements are intended to be understandable by readers who have “a

reasonable knowledge of business and economic activities and accounting and who are
willing to study the information diligently.”
There are different kinds of users of financial statements. The users of financial
statements may be inside or outside the business.
The users of financial statements use financial statements for a large variety of business
purposes and their ability to understand and analyze financial statements helps them to
succeed in the business world.

Classification of Users of Financial Statements:

The financial statements are used by different categories of people for different
purposes. The various users of financial statements are classified and detailed as follows:

Internal Users:
The internal users of financial statements are individuals who have direct bearing with
the organization. They may include:

Managers and Owners: For the smooth operation of the organization, the managers and
owners need the financial reports essential to make business decisions. So as to provide
a more comprehensive view of the financial position of an organization, financial
analysis is performed with the information supplied in the financial statements. The
financial statement is used to formulate contractual terms between the company and
other organizations.
A variable of the financial statement like the current debt to equity ratio is important in
deciding the amount of long term capital that would be required to be raised. The
financial statements of other companies can also provide investment solutions to
different companies. Sometimes it becomes difficult to decide the right field in which
financial resources may be channelised. In such situations the financial statements of
other companies provide the appropriate guideline. Employees: The financial reports or
the financial statements are of immense use to the employees of the company for
making collective bargaining agreements. Such statements are used for discussing
matters of promotion, rankings and salary hike.

External Users:

The external users comprise of:

Institutional Investors: The external users of financial statements are basically the
investors who use the financial statements to assess the financial strength of a company.
This would help them to make logical investment decisions.

Financial Institutions: The users of financial statements are also the different financial
institutions like banks and other lending institutions who decide whether to help the
company with working capital or to issue debt security to it.

Government: The financial statements of different companies are also used by the
government to analyze whether the tax paid by them is accurate and is in line with their
financial strength.

Vendors: The vendors who extend credit to a business require financial statements to
assess the creditworthiness of the business.

General Mass and Media: The common people as well as media also make part of the
users of financial statements.

Brief List of Users of Financial Statements:

 Existing equity investors and lenders, to monitor their investments and to
evaluate the performance of management.
 Prospective equity investors and lenders, to decide whether or not to invest.
 Investment analysts, money managers, and stockbrokers, to make buy/sell/hold
recommendations to their clients.
 Rating agencies (such as Moody’s, Standard & Poor’s, and Dun & Bradstreet), to
assign credit ratings.
 Major customers and suppliers, to evaluate the financial strength and staying
power of the company as a dependable resource for their business.
  Labor unions, to gauge how much of a pay increase a company is able to afford in
upcoming labor negotiations.
 Boards of directors, to review the performance of management.
 Management, to assess its own performance.
 Corporate raiders, to seek hidden value in companies with under priced stock.
 Competitors, to benchmark their own financial results.
 Potential competitors, to assess how profitable it may be to enter an industry.
 Government agencies responsible for taxing, regulating, or investigating the
company.
 Politicians, lobbyists, issue groups, consumer advocates, environmentalists, think
tanks, foundations, media reporters, and others who are supporting or opposing
any particular public issue the company’s actions affect.
 Actual or potential joint venture partners, franchisors or franchisees, and other
business interests who need to know about the company and its financial
situation.

Advantages of Financial Statements

Financial statements show the financial status of your company. Monitoring the financial
health of your business can make the difference between failure and success. For
example, properly scrutinizing financial statements will stop you from spending money
that you do not have and also let you know when you can deploy funds to take your
business to the next level.

Primary Financial Statements

There are three primary financial statements: the balance sheet, the income statement
and the cash flow statement. The balance sheet demonstrates the basic accounting
equation: Assets = Liabilities + Owner's Equity. Assets include everything of value that a
business owns or is owed, and liabilities are what a business owes. Owner's equity —
the balance left over after you subtract liabilities from assets — is the owner's share of
the business. The income statement, also known as the profit and loss statement, shows
the profitability, or lack thereof, of a business over a set period. The cash flow statement
converts finances from accrual basis to cash basis and measures the flow of cash in and
out of the business.
Decision-Making Tools
Because financial statements help you to see a snapshot of your company's financial
position, they are decision-making tools. Financial statements show business trends, the
rate at which you are collecting receivables, the rate at which you are paying creditors
and any cash flow problems. For example, accounts receivables reports show who is
paying on time, 30 days late, 60 days late and 90 days late. Use this financial statement
to determine which customers are in good standing, are in need of collection efforts or
have uncollectible open invoices (if an invoice has not been paid within six months, after
collection efforts, this is probably an uncollectible debt). Accounts payables reports let
you know what is owed to whom and when. You can also generate reports to let you
know what your inventory levels are and the value of the inventory. You can generate a
report to answer almost any question you have about your business that relates to what
you own, what you owe and how much money your company makes. These are
questions you need answered as you make strategic decisions on how to make your
business successful.

Necessary to Get Credit

Businesses often need credit as a part of their strategy to remain financially viable.
Businesses apply for business loans, business credit cards and credit terms with a
vendor. In almost all situations, the lender will ask to see a balance sheet and run your
credit report to decide whether to loan you credit. A balance sheet will show a creditor
how much debt you are carrying and how much money is flowing in and out of your
business. In addition to the financial statements you hand over, an internal accounts
payable report helps you to pay your bills on time and keep your company's credit score
high so you remain a good credit risk.

You Need Them for Compliance

You need financial statements to calculate your quarterly state and federal tax
obligations. State tax obligations include sales and annual taxes. A sales report that
separates taxable sales from nontaxable sales will give you the information you need to
pay the state the sales taxes you collected from customers. Federal tax obligations
include payroll-related taxes and annual taxes. A payroll liability report will outline all
your payroll-related obligations, not only to the federal government but also for
benefits. If you are ever audited, you must be able to provide documentation of the
information reported in your tax filings. Acceptable documentation is financial
statements, beginning with the primary financial statements and any additional
statements auditors request. You must be able to back up the statements with hard
records such as receipts and pay stubs. To prepare both state and federal annual taxes,
you begin with the primary financial statements. You may find that you need to run
additional reports to generate the specific information you need to fill out your tax
forms.

Purpose of Analysis

To help users (both internal and external) make better business decisions.
1. Internal users (managers, officers, internal auditors, consultants, budget officers, and
market researchers) make the strategic and operating decisions of a company.
2. External users (shareholders, lenders, directors, customers, suppliers, regulators,
lawyers, brokers, and the press) rely on financial statement analysis to make
decisions in pursuing their own goals.
3. The common goal of all users is to evaluate:
a. Past and current performance.
b. Current financial position.
c. Future performance and risk.

Standards for Comparisons

Used to determine if analysis measures suggest good, bad, or average performance.
Standards can include the following types of comparisons:
1. Intracompany—based on prior performance and relationships between its financial
items.
2. Competitor—compared to one or more direct competitors (often best).
3. Industry—published industry statistics (available from services like Dun & Bradstreet,
Standard and Poor's, and Moody's).
4. Guidelines (rules-of-thumb)—general standards developed from past experiences.
E. Tools of Analysis – includes horizontal, vertical and ratio analysis.

Information for Analysis

1. Most users rely on general purpose financial statements that include:

a. Income statement
b. Balance sheet
c. Statement of changes in stockholders' equity (or statement of retained earnings)
d. Statement of cash flows
e. Notes related to the statements
2. Financial reporting—is the communication of financial information useful for making
investment, credit, and other business decisions. Includes information from SCE 10-
K or other filings, press releases, shareholders' meetings, forecasts, management
letters, auditor's reports, and Webcasts.

KINDS OF FINANCIAL STATEMENTS

The balance sheet provides the user with data about available resources as well as the
claims to those resources. The income statement provides the user with data about the
profitability of the enterprise detailing sources of revenue and the expenses which
reduce profit. The statement of changes of financial position shows the sources and uses
of a firm's financial resources, demonstrating trends in the alteration of its capital
structure. The statement of retained earnings reconciles the owners' equity section of
successive balance sheets, showing what has happened to generated revenue.

COMPARABILITY OF FINANCIAL STATEMENTS

Comparison of financial statements forms the basis for much financial analysis. Four
main types of comparison are made: (1) comparison of statements for the enterprise
between successive years (2) comparison of a firm's statements with those of a specific
competitor (3) comparison of a firm against an industry standard and (4) comparison
with a target, such as a company's budget. Comparisons between different organizations
may be difficult or even meaningless because of differences in (1) size of the
organization (2) type of organization and (3) accounting methods used by the
organization. Often, both the size and type of organization will dictate the kind of
accounting methods used.

CHARACTERISTICS OF ENTITIES HAVING FINANCIAL STATEMENTS

Non-profit organizations such as government and charities typically present statements

which exhibit their resources and the way those resources are distributed or held.
Stewardship and responsibility are the focus for these statements. Financial statements
for private individuals focus on resources and obligations -- helping the person to assess
his or her financial condition and to plan financial affairs (or obtain a bank loan)
[Rosenfield, 1981]. Retailers are typically highly mortgaged, rely on credit to wholesalers
(following a desire for a large and varied stock), often offer extensive credit to customers
(or no credit, on a strictly cash basis) and reside in high-rent locations. Wholesalers tend
to be characterized by large inventories, large sales volume (with small profit margin)
and chronic credit problems with retailers. Manufacturers tend to have a substantial
investment in fixed assets (machinery, equipment and buildings) and often face major
problems due to a large work-force [Costales,1979]. Service industries -- such as
railroads, airlines and public utilities -- have less of a problem with flow of inventory.
Their focus tends to be on balancing operating revenue against operating expenses
dominated by fixed assets (depreciation, repairs, replacement, maintenance, etc.).
Companies with high proportions of current assets tend to be financed through short-
term borrowing and shareowner investment. Industrial corporations tend to be financed
primarily through shareowners, whereas public utilities and railroads are more often
financed by long-term borrowing (bonds) [Holmes, et al,1970].

Vertical Analysis of Financial Statements

Vertical analysis of financial statements is a technique in which the relationship
between items in the same financial statement is identified by expressing all amounts as
a percentage a total amount. This method compares different items to a single item in
the same accounting period. The financial statements prepared by using this technique
are known as common size financial statements.
This analysis is performed on the income statement as well as the balance sheet.
 Balance Sheet:
When applying this method on the balance sheet, all of the three major categories
accounts (i.e. assets, liabilities, and equity) are compared to the total assets. All of the
balance sheet items are presented as a proportion of the total assets. These percentages
are shown along with the absolute currency amounts. For example, suppose a company
has three assets; cash worth $4 million, inventory worth $7 million and fixed assets
worth $9million. The vertical analysis method will show these as
Cash: 20%
Inventories: 35%
Fixed Assets: 45%
 Income Statement:
And when applying this technique to the income statement, each of the expense is
compared to the total sales revenue. The expenses are presented as a proportion of
total sales revenue along with the absolute amounts. For example, if the sales revenue
of a company is $10 million and the cost of sales is $6 million, the cost of sales will be
reported as 60% of the sales revenue.
The main advantage of using vertical analysis of financial statements is that income
statements and balance sheets of companies of different sizes can be compared.
Comparison of absolute amounts of companies of different sizes does not provide useful
conclusions about their financial performance and financial position.
Usually the vertical analysis is performed for a single accounting period to see the
relative proportions of different account balances. But it is also useful to perform vertical
analysis over a number of periods to identify changes in accounts over time. It can help
to identify unusual changes in the behavior of accounts. For example, if the cost of sales
has been consistently 45% in the history, then a sudden new percentage of 60% should
catch the attention of analysts. Reasons behind this change should be investigated and
then measures should be taken to bring this percentage back to its normal level.

Advantages of Horizontal Analysis

A. Common-Size/ Vertical Statements -- reveal changes in the relative importance of

each financial statement item. All amounts are redefined in terms of common-size
percents.
1. Common-size percentage equals analysis amount divided by base amounts
multiplied by 100.
2. Common-size balance sheets—base amount is usually total assets.
3. Common-size income statements—base amount is usually revenues.
B. Common-Size Graphics
Graphical analysis (e.g., pie charts and bar charts) of common-size statements that
visually highlight comparison information.

Horizontal Analysis of Financial Statements

Horizontal analysis of financial statements involves comparison of a financial ratio, a

benchmark, or a line item over a number of accounting periods. This method of analysis
is also known as trend analysis. Horizontal analysis allows the assessment of relative
changes in different items over time. It also indicates the behavior of revenues,
expenses, and other line items of financial statements over the course of time.
Accounting periods can be two or more than two periods. Accounting period can be a
month, a quarter or a year. It will depend on the analyst’s discretion when choosing an
appropriate number of accounting periods. During the investment appraisal, the number
of accounting periods for analysis is based on the time horizon under consideration.
Horizontal analysis of financial statements can be performed on any of the item in the
income statement, balance sheet and statement of cash flows. For example, this analysis
can be performed on revenues, cost of sales, expenses, assets, cash, equity and
liabilities. It can also be performed on ratios such as earnings per share (EPS), price
earning ratio, dividend payout, and other similar ratio.
Horizontal analysis can be performed in one of the following two different methods i.e.
absolute comparison or percentage comparison.
 Absolute Comparison:
One way of performing horizontal analysis is comparing the absolute currency amounts
of some items over the period of time. For example, cash in hand at the end of an
accounting period can be compared to other accounting periods. This method is helpful
in identifying the items which are changing the most.
 Percentage Comparison:
In the second method of horizontal analysis, percentage differences in certain items are
compared over a period of time. The absolute currency amounts are converted into the
percentages for the purpose of comparison. For example, a change in cash from $5,000
to $5,500 will be reported as 10% increase in cash. It can also be reported as 110%,
which means that the cash is 110% of the cash at the end of previous accounting period.
This method is useful when comparing performance of two companies of different scale
and size.

Advantages of Horizontal Analysis:

A. Comparative Statements -- reports financial amounts for more than one period
placed side by side in columns on a single statement.
1. Computation of Dollar Changes and Percentage Changes—usually shown in line
items.
a. Dollar change = Analysis period amount minus Base period amount.
b. Percent change = Analysis period amount minus Base period amount
divided by Base period amount times 100.
Notes:
(1) When a negative amount appears in the base period and a positive amount in
the analysis period (or vice versa)— a meaningful percentage change cannot be
computed.
(2) When there is no value in the base period—percentage change is not
computable.
 (3) When an item has a value in the base period and zero in the next period—the
decrease is 100 percent.
2. Comparative balance sheets
a. Consist of balance sheet amounts from two or more balance sheet dates arranged
side by side.
b. Usefulness is improved by showing each item’s dollar change and percent change to
highlight large changes.
3. Comparative income statements
a. Amounts for two or more period are placed side by side.
b. Additional columns are included for dollar and percent changes.

B. Trend Analysis -- used to reveal patterns in data across successive periods. Involves
computing trend percents (or index number) as follows:
1. Select a base period and assign each item in the base period a weight of 100%.
2. Express financial numbers as a percent of their base period number.
3. Trend percent equals analysis period amount divided by base period amount times
100.

Ratio Analysis of Financial Statements

Ratio analysis is the quantitative analysis of financial information from a company's

financial statements or share price. Ratios are key to financial analysis, as they provide
input for evaluating and comparing a company to its peers, or to an industry benchmark.

Advantages and Disadvantages of Ratio Analysis

Advantages:
 Ratios help compare current performance with previous records.
 Ratios help compare a firm’s performance with similar competitors.
 Ratios help monitor and identify issues that can be highlighted and resolved.
Disadvantages:
 Ratio analysis information is historic – it is not current.
 Ratio analysis does not take into account external factors such as a worldwide
recession.
 Ratio analysis does not measure the human element of a firm.
 Chapter Three
PRAN stands for Program for Rural Advancement Nationally.
The largest fruit and vegetable processing industry in Bangladesh with countrywide
distribution network AMCL’s PRAN is an established brand of Bangladesh with an
extensive sales force all over the country. PRAN have a well-developed infrastructure for
production, sales and distribution. PRAN has proven itself as – Local product but of
international standard.
AMCL was launched in 1985 as an agri-business venture to:
 Serve small farmers with inputs.
 Marketing farm produce for profits.
 Organizing contract growers to grow specific crops.
 Exports of agricultural products.
Soon it was apparent that a processing facility was imperative for a sustainable venture.
AMCL therefore set up a factory on 8 acres in Ghorasal with machinery for bottling and
canning in May 1991. The factory has expanded substantially over the last 9 years in all
spheres of food processing e.g. bottling, canning, pulping, pickling, concentrating as well
as installation of Bangladesh’s first Tetra-Pack facility and a modern Extrusion plant for
snack food. Machinery for all these lines are being installed, expanded, modified and
fabricated continuously.
AMCL are very keen to adopt a new technology as it is discovered because of being in
such a competitive market. PRAN’s R & D are always working hard for a better
technology of production. All departments’ administrative works are done through
connected computers using the best software and hardware.
Being a major exporter PRAN has to communicate a lot with outside suppliers, retailers
or consumers. Therefore this section is very important for AMCL. PRAN has taken this
communication issue very seriously. They often have to do meetings by doing
teleconferences, internet shopping, video conference etc.
AMCL provides with good quality products conforming to local tastes, health and
hygienic standards which are of affordable price and within the reach of target
consumers. This is the first and largest ISO 9001 certified food processing industry in
Bangladesh.
Mission:
Defines the fundamental purpose of an organization or an enterprise, succinctly
describing why it exists and what it does to achieve its vision. For example, the charity
above might have a mission statement as “providing jobs for the homeless and
unemployed” A mission statement is a brief description of a company’s fundamental
purpose. It answers the question, “Why do we exist” The mission statement articulates
the company’s purpose both for those in the organization and for the public.

The mission of PRAN group is to generate employment and earns dignity & self respect
for our compatriots through profitable enterprises.

Vision:
Outlines what the organization wants to be, or how it wants the world in which it
operates to be (an “idealized” view of the world). It is a long-term view and concentrates
on the future. It can be emotiveand is a source of inspiration. For example, a charity
working with the poor might have a vision statement which reads “A World without
Poverty.”
Objectives:
AMCL and its Brand name “PRAN” have twin objectives – “achieving social values with
sustainable pecuniary advantage for all our stakeholders.”
Goals:
 To remain as the market leader with consumer items in food & beverage sector
in the country & to be the market leader in same sector in abroad with minimum
NP level of 10%.
 Quality maintenance and improvement.
 Satisfied customers.
 Hold on to the current customers and again gain customer loyalty.
 Gain competitive advantage over all the competitors.
 To double sales and expand production capacity every 7-8 years.
 To become one of the biggest names in international fruit and vegetable
processing industry
“PRAN” is currently one of the most admired food & beverages brand among the
millions of people of Bangladesh and other 82 countries of the world where PRAN
Products are regularly being exported.
The company hasn’t reached this position without a great management function.
 Financial Statement for the year of 2012, 2013 and 2014
Balance Sheet

2012 2013 2014

Assets:
Non-Curren Assets:
Property, Plant & Equipment 360436499 334977311 341808493
Current Assets 777882302 798192332 754101724
Inventories 534462767 549659858 515560213
Accounts Receivable 59516831 58104684 74962348
Advance, Deposits & Prepayments 146045134 166052772 147697841
Cash & Cash Equivalents 37857570 24375018 15881322
Total Assets: 1916201103 1931361975 1850011941
SHAREHOLDERS EQUITY AND LIABILITES:
Shareholders equity: 426965832 457103264 487066242
Share Capital 80000000 80000000 80000000
Share Premium 40000000 40000000 40000000
Reserve & Surplus 306965832 337103264 16068572
Long Term Loans-Secured 113025000 85525000 42707500
Deferred Tax liability 27912119 25141857 24897012
Current Liabilities: 570415850 565536787 541239463
Short Term Bank Loans 433509429 407590404 417371252
Long Term loans- Current Portions 37675000 42762500 42707500
Liabilities for Goods 3386997 1753704 1752991
Liabilities for Expenses 8092634 9874064 12608338
Liabilities for Other Finance 26848332 27794906 26038165
TOTAL SHAREHOLDERS EQUITYS AND LIABILITIES 1916201103 1931361975 1850011941
 Financial Statement for the year of 2012, 2013 and 2014

Income Statement
2012 2013 2014
Sales 1479083463 1554446836 1727217669
Cost of Goods Sold 1151350648 1208797483 1353202996
Gross Profit 327732815 345649353 374014673
Expenses: 257636014 275027974 299735993
Administrative & Selling Expenses 122098082 23644274 26784229
Marketing Expenses 46218058 50006089 80402065
Selling & Distribution Expenses 53547350 56709486 69405045
Financial Expenses 135537932 144668125 123144654
Operating Profit 70096801 70621379 74278680
Other Income 445290 584920 36912
Contribution to Worker's Participation & Welfare
Funds 3504840 3560315 3535322
Profit Before Taxation 67037251 67645984 70706446
Provision for Income Tax 14819644 12816085 15282320
Current Tax 15775841 16913843 15527165
Deferred Tax 956197 4097758 244845
Profit After Taxation 52217607 54829900 55424126
  Horizontal Analysis:
Horizontal Analysis is a technique of studying several financial statements
(Balance Sheet & Income Statement) over a series of years. In this analysis
the trend percentages are calculated for each item by taking the figure of
that item for the base year taken as 100. Generally, the first year is taken
as a base year. This analysis is done to see the upward or downward trend
of the financial statements throughout five different years.

 Horizontal Analysis of Income Statement:

The Horizontal Analysis of income statement shows the analysis on the
different periods of the income statement assuming one year as base.
The trend of increasing or decreasing in the items of income statement is
analyzed.

Income Statement
For the Year of 2012 & For the Year of 2013 &
Horizontal Analysis 2013 2014
Amount Percent Amount Percent
Sales 75363373 5.10% 172770833 11.11%
Cost of Goods Sold 57446835 4.99% 144405513 11.95%
Gross Profit 17916538 5.47% 28365320 8.21%
Expenses: 17391960 6.75% 24708019 8.98%
Administrative & Selling Expenses -98453808 -80.64% 3139955 13.28%
Marketing Expenses 3788031 8.20% 30395976 60.78%
Selling & Distribution Expenses 3162136 5.91% 12695559 22.39%
Financial Expenses 9130193 6.74% -21523471 -14.88%
Operating Profit 524578 0.75% 3657301 5.18%
Other Income 139630 31.36% -548008 -93.69%
Contribution to Worker's
Participation & Welfare Funds 55475 1.58% -24993 -0.70%
Profit Before Taxation 608733 0.91% 3060462 4.52%
Provision for Income Tax -2003559 -13.52% 2466235 19.24%
Current Tax 1138002 7.21% -1386678 -8.20%
Deferred Tax 3141561 328.55% -3852913 -94.02%
Profit After Taxation 2612293 5.00% 594226 1.08%

Interpretation:
 The absolute value of net sales is in increasing trend. While comparing
the value to 2012, the net sales figure is increasing rapidly throughout
the four years up to 2013. At 2014 the actual value of net sales is low
in compare to 2013 so the absolute change in value during 2014
compared to 2012 is less than rest of the years.
 The total income is increasing parallel with the net sales. While the
expenditure is increasing rapidly above the net sales due to increase
in the material consumption and operating expenses. This results low
in the pace of increasing operating profit.
 The financial expenses, exceptional items, current tax and deferred
tax are affecting the growth of the company. The company is in loss
due to the heavy increase in the amount of exceptional items and
financial expenses. This shows that the company accrues unusual
charges in the ordinary course of its business.
 The increase in the amount of financial expenses indicates the
company possess large amount of debt than its equity.
 The deferred tax is increasing after 2013 which adds up the net profit
value as shown in the worksheet. It is an asset to the company.
 Despite of the heavy loss seen through the trend of three years, the
loss is minimized from the balanced transferred from previous years.

Formula for Horizontal Analysis of Income Statement:

Amount= Last year – Previous year
Percent = Amount/base year
  Horizontal Analysis of Balance Sheet:

The different periods of balance sheet is compared with base year in

order to know the fluctuation of the items based on one year.

For the year of 2012 & For the year of 2013 &
2013 2014
Amount Percent Amount Percent
Assets:
Non-Curren Assets:
Property, Plant & Equipment -25459188 -7.06% 6831182 2.04%
Current Assets 20310030 2.61% -44090608 -5.52%
Inventories 15197091 2.84% -34099645 -6.20%
Accounts Receivable -1412147 -2.37% 16857664 29.01%
Advance, Deposits & Prepayments 20007638 13.70% -18354931 -11.05%
Cash & Cash Equivalents -13482552 -35.61% -8493696 -34.85%
Total Assets: 15160872 0.79% -81350034 -4.21%
SHAREHOLDERS EQUITY AND
LIABILITES:
Shareholders equity: 30137432 7.06% 29962978 6.55%
Share Capital 0 0.00% 0 0.00%
Share Premium 0 0.00% 0 0.00%
Reserve & Surplus 30137432 9.82% -321034692 -95.23%
Long Term Loans-Secured -27500000 -24.33% -42817500 -50.06%
Deferred Tax liability -2770262 -9.92% -244845 -0.97%
Current Liabilities: -4879063 -0.86% -24297324 -4.30%
Short Term Bank Loans -25919025 -5.98% 9780848 2.40%
Long Term loans- Current Portions 5087500 13.50% -55000 -0.13%
Liabilities for Goods -1633293 -48.22% -713 -0.04%
Liabilities for Expenses 1781430 22.01% 2734274 27.69%
Liabilities for Other Finance 946574 3.53% -1756741 -6.32%
TOTAL SHAREHOLDERS EQUITYS AND
LIABILITIES 15160872 0.79% -81350034 -4.21%

Formula for Horizontal Analysis of Balance Sheet:

Amount= Last year – Previous year
Percent = Amount/base year

Interpretation:
 The Horizontal Analysis of the company reveals that the absolute
change in fixed assets is negative during 2012-2013 & 2013-2014 due
to the decrease in the large value of fixed assets which shows
investment in fixed assets is down from the year 2012.
 The percentage of total debt is negative during the year 2013-2014
due to decrease in the value of secured and unsecured loan. This
shows that the outsider fund is less in the year 2014 in compare to
2012. The company is financing largely through its shareholders’ fund.
 The share capital of the company is in increasing trend. This shows
that the company is issuing its share.
 The reserve & surplus fund of the company depends on the profit it
makes in the previous year. Here the reserve is in decreasing trend up
to negative and after 2012 it remains constant. This means the
company has utilized reserves and surplus for the payment of
dividends to shareholders either in cash or by way of bonus.
 The percentage of outsiders fund is more than that of the of
shareholders fund which means the company uses long term debt to
purchase fixed assets.
 The percentage change in current assets is more than percentage
change in current liabilities which show current assets is more than
current liabilities during all five years. This further confirms that the
company has used long-term finances even for the current assets
resulting into an improvement in the liquidity position of the
company.
 The working capital is insufficient to finance investment of the
company due to the exceed of current liabilities over current assets.
  Vertical Balance Sheet:

A statement where balance Sheet items are expressed in the ratio of each
asset to total assets and the ratio of each liability is expressed in the ratio
of total liabilities in called Vertical Balance Sheet.

Percent Percent Percent

For the year of For the year For the year of
2012 of 2013 2014
Assets:
Non-Curren Assets:
Property, Plant & Equipment 18.81% 17.34% 18.48%
Current Assets 40.60% 41.33% 40.76%
Inventories 27.89% 28.46% 27.87%
Accounts Receivable 3.11% 3.01% 4.05%
Advance, Deposits & Prepayments 7.62% 8.60% 7.98%
Cash & Cash Equivalents 1.98% 1.26% 0.86%
Total Assets: 100.00% 100.00% 100.00%
SHAREHOLDERS EQUITY AND LIABILITES:
Shareholders equity: 22.28% 23.67% 26.33%
Share Capital 4.17% 4.14% 4.32%
Share Premium 2.09% 2.07% 2.16%
Reserve & Surplus 16.02% 17.45% 0.87%
Long Term Loans-Secured 5.90% 4.43% 2.31%
Deferred Tax liability 1.46% 1.30% 1.35%
Current Liabilities: 29.77% 29.28% 29.26%
Short Term Bank Loans 22.62% 21.10% 22.56%
Long Term loans- Current Portions 1.97% 2.21% 2.31%
Liabilities for Goods 0.18% 0.09% 0.09%
Liabilities for Expenses 0.42% 0.51% 0.68%
Liabilities for Other Finance 1.40% 1.44% 1.41%
TOTAL SHAREHOLDERS EQUITYS AND
LIABILITIES 100.00% 100.00% 100.00%
Formulas:
Vertical Analysis:

Currnet _ Assets
Total _ Assets
Shareholders_Equity_and_Liabilities
Total_Shar eholders_Equity_and_Liabilities
Interpretation:

 An analysis of pattern of financing of PRAN Group throughout five

years shows that the company’s shareholders fund has Net worth in
terms of its total fund as 21.52% (2012), 27.64% (2013) & 30.69%
(2014) while Outsiders fund has total debt in terms of its total fund as
78.48% (2012), 72.36% (2013) & 69.31% (2014). This shows that the
company depends more on its outsiders funds account than
Shareholders’ fund.

 The company has sufficient working capital. The percentage of current

liabilities is less than percentage of current assets in all five years.

 A close look at the balance sheet shows that investments in fixed

assets have been from working capital in the company. The fixed
assets account for 44.69%, 59.76%, & 55.52%, of the total assets
respectively from 2012 to 2014. The percentage of fixed assets varies
in accordance with the change in current assets and current liabilities
throughout the years.

 The investment in the company seems to be in increasing due to high

level of working capital in the company.
  Vertical Analysis :

Vertical Analysis between Current Assets & Total Assets

The Vertical statements (Balance Sheet and Income Statement) are shown in
analytical percentages. The figures of these statements are shown as percentages of
total assets, total liabilities and total sales respectively.

 Vertical Income statement:

The items in income statement can be shown as percentages of Net

sales to show the relations of each item of sales.

Interpretation:

 The sale and operating profit have increased in absolute value as

well as in terms of percentage of net sales.

 The percentages of income are more than percentage of

expenditure with respect to its net sales, so the operating profit
(PBDIT) is positive throughout the years.

 The net profit of the company is negative in the year 2012 & 2014
due to heavy increased in percentage of exceptional items.

Formulas:
Current Ratio =
Quick Ratio =
Gross Margin Ratio =
Net Profit Margin Ratio =
Inventory Turn over Ratio =
Return on Asset Ratio =
Return on Investment =

Return or Profitability:
  Return on Assets (ROA): The Return on Assets ratio is calculated from Appendix
A-1 to A-2. The highest value of the ratio is 4.58% in year 2015 and lowest is
3.88% in year 2014. So, the performance of 2015 is so good than 2014.
 Return on Equity (ROE): The Return on Equity ratio is calculated from Appendix
A-1 to A-2.The highest value of the ratio is 12.23% in year 2015 and lowest is
11.33% in year 2014. The performance of PRAN was good in last year.
 Net Profit Margin: The Net Profit Margin ratio is calculated from Appendix A-1 to
A-2. It shows the net profitability of two years. In there, PRAN shows the best
performance in year 2015. The highest value of the ratio is 3.53% in year 2015
and the worst value of PRAN was 3.45% in year 2014.
 Gross Profit Margin: The Gross profit margin ratio is calculated from Appendix A-
1 to A-2. It shows the net profitability of two years. In there, PRAN shows the
best performance in year 2015. The highest value of the ratio is 22.16% in year
2015 and the worst value of PRAN was 21.80% in year 2014.
Liquidity:
 Current Ratio: Current ratio is calculated from Appendix A-1 to A-2.PRAN is in the
best position in year 2015 and the value is 1.36%. But the performance of year
2014 was poor than year 2015.
Debt Management:
 Debt Ratio: Debt ratio is calculated from Appendix A-1 to A-2. It shows PRAN has
the more dependency in year 2015 which value is 60.03% and the value of year
2014 was 63.31%
Asset Turnover Ratio:
 Asset Turnover ratio is calculated from Appendix A-1 to A-2.PRAN is in the best
position in year 2015 and the value is 1.30 times. The value of year 2014 was
1.12 times which is poor than year 2015.
Equity Ratio:
 Equity ratio is calculated from Appendix A-1 to A-2.PRAN is in the best position in
year 2015 and the value is 65.27%. The value of year 2014 was 56.86% which is
poor than year 2015.
Inventory Turnover Ratio:
 Inventory Turnover ratio is calculated from Appendix A-1 to A-2.PRAN is in the
best position in year 2015 and the value is 2.77 times. The value of year 2014
was 2.55 times which is poor than year 2015.
 FINDINGS

1. They provide the medical care center for the workers in every factory, which contains
one doctor and supervisor. Their medical care center doesn’t supply any drug for the
employees.

2. They keep safety and record book as well as log book for machinery.

3. They provide a well structure and well furnished canteen. They do not have any
managing committee regarding the canteen. There is also lack of supervise the canteen.
For this reason, sometimes the employees supper for lack of hygienic food.

4. They have adequate washing facilities in the factories, which are in the Dhaka city. But
the factories which are not in the city of Dhaka don’t have enough washing facility for
the workers.
5. Some of their factories have launch room but some of the factories have no launch
room. Where there is no any launch room the canteen room is used as a launch room.
6. They have not any kind of rest room in any factory. So, that the employees use the
canteen as a rest room. Under this circumstances, the canteen sometime turn into a
very crowded place.
7. They do not provide any kind of room for the workers children and it is restricted to
bring the children in the factory.
8. They provide three months maternity leave for each and every women employee.
Moreover, with in this period they give the salary of the employee by cheque.
9. There is no other benefit for the women workers in the time of delivery and after the
time of delivery.
 SWOT ANALYSIS ON PRAN-RFL GROUP

In Bangladesh PRAN-RFL is one of the most successful company as well as organization.

This group is trying to achieve a good position in local and global market. So, they have
to analyze the SWOT matrix. SWOT analysis is a planning tool used to analyze an
organization’s STRENGTH, WEAKNESS, OPPORTUNITIES & THREATS. Strength and
weakness are organizations internal factor. Opportunities and threats are organizations
external factor. Now the SWOT analysis of PRAN-RFL is given below:

1. INTERNAL STRENGTH:
- Risk pooling factor.
- Large company and organization.
- Experiences.
- Superior source of finance.
- Better control over sources and raw material.
- Financial support
- Vast distribution network.
- Good reputation.

2. INTERNAL WEAKNESS:
- Unequal promotions strategy.
- Lack of first mover’s advantages.
- Lack of good control
- A lot of distance and a huge amount of transport cost.
- Internal promotion.
- Internal media planning.

- Unpreserved item
- Limited product range.
3. EXTERNAL OPPORTUNITIES;
- Demand in global market.
- Large demand in local market.
- Domestic natural resources.
- Cheap labor.
- Ethnocentrism
- Government incentives.
- Cash incentives.
- Vat.

4. EXTERNAL THREATS;
- Huge competition.
- Competition in market price.
- Lack of benefits.
- Strict health and technical standard.
- Changing choice of customers.
- Foreign competitor.
- Weak distribution.
- changing market.

RECOMMENDATION
From the above discussion, we have come to know that PRAN-RFL group always tries to
follow the Bangladesh Labor Act, 2006. But not in every sector they are succeed. There
is some short comings. They have to try to minimize it. They are as follows-

1. In first-aid appliances, they have to try to supply some medicines for the employees so
that the employees can have it easily in the time of emergency.
2. The factories, which are located out side of Dhaka city, do not have enough facilities
for washing. They should try to provide the washing facilities towards the factory, which
are not in the Dhaka city.

3. They do not have any managing committee for the canteen. They should try to build
up a managing committee for the canteen.

4. They don’t have any separate launch room in several factories. They should try to
build up launch rooms in each and every factory.

5. There is no separate entity of rest room in PRAN-RFL group. They should build up this
concept for the welfare of the employees.
6. In this modern time, more and more female workers are coming to the work. So, they
must try to build rooms for children.

7. Their maternity facility is not enough for the women employees. They should try to
give some additional benefit in the time of delivery to the women employees.
Conclusion
No ideology, no ism, no political theory can win a greater output with less effort from a
given complex of human and material resources, without sound management. Although
this firm is in a very good position in the market, we would just make a suggestion that,
they should offer more and more differentiated products through segmentation of the
current market in more details. Of course, the economic capability of target customers
must be carefully analysed. Managers can communicate more and make survey to reach
closer to the customers and create market offerings which are both for the betterment
for the firm as well as for the society. This practical experience gathered from observing
these established company of Bangladesh has just helped us to reach to a conclusion
that – What nurtured the success of PRAN-RFL group?
Bibliography:
 .Ahmed Dr. Zulfiquar; A text book of Bangladesh Labor Act, 2006, 1st edition,
Shams Publications.

Sen Arun Kumar & Mitra Jitendra Kumar; Commercial Law and Industrial Law,
26th edition, The world press private limited, Kolkata.

Bagrial Ashok K.; Company Law, 10th edition, Vikas Publishing house private
limited.
 www.pranrflgroup.com
 www.Google.com
 http://www.pranfoods.net/employee_care.php
 Management by Stephen P. Robbins
 EWU library.