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Report on
Analysis of Financial Statement
A Study on Saiham Textile




Department of Finance
University of Dhaka


Submitted by Submitted to
Mohammad Junaid Shawon
BBA 16
th
Batch
Id-16-017
Department of Finance
University of Dhaka

Dr. Mahmood Osman Imam
Professor
Department of Finance
University of Dhaka

Date of Submission: 01/08/2013


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Letterof Transmission
Date: 01-08-2013
Dr. Mahmood Osman Imam
Professor
Department of Finance
University of Dhaka
Subject: Valuation and financial statement and industry analysis of Saiham Textile
Dear Sir,
This is a great pleasure for me to submit the report on Financial statement &Industry
analysis of Saiham Textile as a partial requirement of the BBA program in University of
Dhaka.
Writing this report has been a great pleasure & an interesting experience.
This project helped me tremendously to understand the implication of theoretical knowledge
in the practical field. It has also shaped some of our basic views like how to manage the
pressure.
I have undertaken our sincere effort for successful completion of the report. If I have any
unintentional error and omission that may have entered into this report will be considered
with sympathy.
Therefore, I beg your kind consideration in this regard, we will be very grateful if you accept
our report and oblige there by.

Sincerely,

Mohammad Junaid Shawon
Id-16-017
BBa 16
th
Batch
Section- A
BBA-16
th
Batch



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Table of Content
Chapter Page
Introduction 4-7
Textile sector in BD 05
History 05
prospects 6-7
Company overview 8-11
Historical Background 09
Distribution of Product 10
Industrial structure 11
SWOT analysis 12-16
Industry analysis 17-21
Ratio analysis 22-
Graphical approach 24-31
Comparison of ratio 32
DuPont Analysis 36
Red Flags 39
FCF Analysis 41
Analysis of Sustainable Growth 42
Valuation 44
Conclusion 46
Appendix 47 to End



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Introduction

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Textile and spinning industry are very important industry in the perspective of our country.
This sector not only contributes a significant portion in the national income of the country,
but also the textile sector gives employment to a lot of people.
Saiham Textile Mills Limited is one of the known names in the textile industry, which has
been operating for more than 20 years. The company later added up a spinning unit with its
previous operation in the textile unit. Over the years Saiham has been a familiar name to the
people of middle and lower middle income as it has been providing quality products at a very
reasonable price. The products of the company have been pretty much good in quality and
targeted to substitute the imported fabrics for the end users. It can be said that the company
has achieved some degrees of success as it has proved to be a strong local company, which
has created its own position in the local market.
Textile Sector in Bangladesh
Textiles have been an extremely important part of Bangladesh's economy for a very long time
for a number of reasons. The textile industry is concerned with meeting the demand for
clothing, which is a basic necessity of life. It is an industry that is more labor intensive than
any other in Bangladesh, and thus plays a critical role in providing employment for people.
Currently, the textile industry accounts for 45% of all industrial employment in the country
and contributes 5% of the total national income.
History

Traditionally, artisans working in small groups, in what are often referred to as cottage
industries, produced most of the textile in the sub-continent. There were many such artisans
in the area that was to become Bangladesh. In fact, from prehistoric times until the Industrial
Revolution in the eighteenth century, East Bengal was self-sufficient in textiles. Its people
produced Muslin, Jamdani, and various cotton and silk fabrics. These were all well regarded
even beyond the region as very skilled craftsmen manufactured them.
However, after 1947 and the partition of East and West Pakistan from India, most of the
capital and resources of Pakistan came under the control of West Pakistanis. The textile
industry thus stagnated in East Pakistan as momentum for development shifted from the
eastern part of the country to the west. The west also grew more cotton than the east, which
was used as a plea for developing the industry in the west instead of in the east. West
Pakistani industrialists also owned the majority of all industries in the east.
When Bangladesh gained its independence from Pakistan in 1971, the new government
nationalized the textile industry, as it did with many other businesses in which West
Pakistanis had been the principal owners. Although there were some Bangladeshi
industrialists, they did not form a large or politically powerful group and thus had to
surrender control of their factories to







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the government as well. All of the country's textile factories were then nationalized and
organized under the BTMC.
The government then gradually denationalized the production of textiles. Factories were
privatized, beginning with the dyeing and weaving units. Since that time, much of the
industry has been privatized through auctions and other means.
The textile industry has been the catalyst for industrialization in numerous countries. For
example, in England, the Industrial Revolution with the new development in coal 5
and steel led to the establishment of a mass textile industry, which catalyzed the
industrialization process in the eighteenth century. Similarly textiles played a major role in
the industrialization of Japan, South Korea, Taiwan, Hong Kong, and Indonesia. The same
has been true to a certain degree in this country. After privatization, the quality of the fabrics
produced improved significantly, leading to a great increase in the demand for Bangladeshi
textiles in both the international market, as well as the export oriented garment industry of
Bangladesh. This launched the industry into a period of rapid growth that is continuing at
present.
Prospect:

Today, the textile industry of Bangladesh can be divided into the three main categories: the
public sector, handloom sector, and the organized private sector. Each of these sectors has its
advantages and disadvantages. Currently, the organized private sector dominates, and is also
expanding at the fastest rate.

Public Sector

The public sector is that portion of the industry controlled by organizations that are part of the
government, such as BTMC. The factories in the public sector enjoy certain privileges such
as government funding. However, in Bangladesh, factories in the public sector are not well
supervised. There are frequent changes in officers, and many of these officials do not have a
personal interest in the factory for which they are responsible. In addition, the equipment in
this sector is not well maintained, as much of the money allocated for this purpose is not
spent as planned, but is wasted through corruption and poor accounting.

Handloom Sector:

The rural group of textile producers includes operators of handlooms and a number of
organizations, which employ rural women, such as BRAC. The Handloom industries provide
employments for a large sector of population of our country. It also supplies large portion of the
fabrics required by the local market. Factories in this sector are well looked by the owners and are
quite productive, considering the equipment available. However the inferiority of the machinery,
mostly due to their narrow width means that the fabric production is slow and thus the quality
varies a lot.







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has the opportunity to compete internationally. If this sector can flourish, it would
help the garments sector of the country with quality threads. This is how the private
sector can help Bangladesh to gain a place in the international market



Private sector
The private sector has the opportunity to grow most. The private investors are coming up
with new projects and these new projects with quality machinery and management




























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Company overview















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Saiham Textile Mills Limited is one of the pioneers among the private sector textile mills in
Bangladesh. The company was incorporated in 1981. And later the construction started in the
year 1983. The construction work was finished in 1984 and the production started at the same
year. The founders decided to make the textile industry at Noyapara, in Habiganj district. The
main objective of Saiham was to substitute imported fabrics. Creating job opportunities for
the local people was another consideration that made the decision of making the factory in
that rural area.
The industry has two production units. Unit 1 produces textiles along with weaving, printing
and dying. Unit 2 is the spinning mill, which produces the yarns, needed for production of
fabrics as well as for selling them in the local market to meet local demands.
The company has created a strong base in the local market over the years. The company has a
pretty good financial base as it has been able to pay off all its debt and also the company has
been able to pay dividends to its stockholders for the years. The company has a good prospect
to grow and its competing very strongly in the local market. Also, the quality products at a
reasonable price helped people to rely more on the local products. Saiham also do not spend a
huge amount of money on the promotional campaign but engages in various social activities
and donations.
There is a huge prospect for our textile sector to develop as a supplier of quality raw material
for the much-developed RMG sector of our country. This is a huge prospect for Saiham if
they can utilize this opportunity they could have come out to be a pretty strong competitor in
the textile sector as well as contributing to our economic development.
Historical Background

The planning of making a textile industry by the initiators of Saiham Textile Mills Limited
was taken at that time in the year of 1979, after the government decided to give permissions
to the local entrepreneurs to form and operate textile industries. 7
The project of taka 20 crore was sanctioned in 1981 and BSRS approved the project and
agreed to give loan facilities at the same year. And then the construction started in the
January of 1983. The construction work was finished in 1984 and the production started at
the same year. The initial project included weaving, dyeing and printing facilities with a
production capacity of 3 million yard per annum. For that they decided to setup 150 looms,
which were semi automatic.





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The founders decided to make the textile industry at Noyapara, in Habiganj district. Though
the location was chosen in a rural area, the communication was not all that bad there. The
plant site is just opposite of the Noyapara railway station and not very far from the Dhaka-
Sylhet highway. The main objective was to substitute imported fabrics. Creating job
opportunities for the local people was another consideration that made the decision of making
the factory in that area.
In the early 1990s the company got approval of making a spinning unit. It was a 32 crore-taka
project. This time the main funding was provided by BSRS too. The company started the
construction work in 1992. The spinning unit started its operations and production in 1994.
The spinning unit consists of 25,900 spindles.
The company used Chinese and Japanese machineries for their production process. The high
quality machine has been serving them pretty well till now. For the electricity they first used
electric supply from the rural electric supply for their first unit. Later, because of the
increasing number of power failure, diesel run stand by generator of same capacity has been
established. And for the unit II, they decided to use their own gas generator, as it proved to be
more cost efficient.
For the raw materials they depend heavily on imported raw materials. They import cottons
from USA, Former Soviet countries, West African countries and Egypt. They use these
materials for the spinning unit. And for the unit 1, they use both yarn produced from the unit
2, as well as imported yarns. They also have to import dyes, bleaching powders and other
chemicals for producing quality products. 8
In these years the company has created a good position in the textile and spinning market of
Bangladesh. The quality products at a reasonable price helped people to rely more on the
local products. Moreover, the company also got some financial success in these years. The
most significant among these is the companys success in repaying the entire amount of its
loan to BSRS before its due date. In the increasing competitive market the company has been
able to hold its strong position over the years.



Distribution of product


All the productions of the Saiham Textile Mills (Spinning Unit) are sold through
Narayanganj (a textile hub close to Dhaka), where they have their own local agent. The
export yarn that they are producing, even though the mill receives direct LC's from the
knitters, are yet delivered from Narayanganj warehouse to ensure timely and prompt delivery.





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Textile Industry Structure of Bangladesh



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SWOT Analysis















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Strength:
Competitive Price:
The price of the products of Saiham Textile Mills is very competitive. It gives them the edge
to attract its target customers.
Advantage of cheap labor:
Both the factories of Saiham Textile Mills are situated in rural areas in Habiganj. It helped
the management to get some cheap labor from the rural areas. This is a good advantage to
Saiham and it also helped to get some disciplined work force for the good management of the
company.
Advantage of being in the business for a long time:
Saiham has been in the business from more than 20 years. Most of its competitors were not in
the scene at that time. So the management has gained a lot of experience from then on. So it
has given Saiham a competitive edge over its competitors.
Product Quality:
The qualities of the products produced by Saiham are very good. These products are a very
good substitute for imported foreign goods. And in these two decades of its operation, the
products of Saiham have gained a good reputation amongst the target population of the
company.
Potential Market:
There is a good need of yarn and fabrics in the country. So Saiham has a great market for
their goods throughout the country. And it is also possible for the company to expand its
market outside the country. 12
Innovation of New Products:
Innovation of new products is a very good strength for Saiham. Saiham is well reputed for
there innovation of new goods in local fabric market.
Skilled Management:
Saiham has got a very skilled management team. In this few years the management team has
been able to operate the company pretty strongly. So the skilled management is another very
good strength for Saiham.



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Weakness:
Poor distribution network:
The distribution network of Saiham is not very well designed. There are only 3 distribution
outlets for Saiham. They rely more on the wholesalers rather than on their own outlets. This
is not a very good strategy as it makes people more confused getting goods of Saiham in the
market.
Directors involved in the management:
The Company hasnt yet developed a corporate structure. The directors are heavily involved
in the management of the company. This is not a very good sign for any business
organization.
Unskilled Labors:
As the factory is located in rural areas and as the labors are recruited mostly from the nearby
villages, therefore the labors are not very much skilled. The unskilled labors can become a
very big weakness for the company, as the company needs to train up the unskilled labor,
which incurs cost.
Scarcity of Technical Person:
There is scarcity of skilled technical person all over Bangladesh. For Saiham the problem is a
more intense as their factories are located in the rural areas. So Saiham faces a lack of
technical experts and it often causes problems for the company. 13
Old Machineries:
Saiham has been in the business since quite a long time. They are still most of the
machineries they installed initially. Of course the productivity of those machineries has
decreased over the years. As a result the company has to sacrifice many opportunities they
might have got by increasing more materials by using new machineries.








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Opportunity
Raw Material for RMG sector:
In our country there is a huge market for the textile industry to work as the backward sector
of the RMG sector. Only 5% of the raw material for the RMG sector has been provided by
the local textile and spinning mills. Because of the low quality of the local textile mills due to
lack of efficiency and good machineries, the textile industry has not been able to keep its part
in the export of RMG sector of Bangladesh. So it is a great opportunity for Saiham to use its
expertise and invest more on its machineries and work as the supplier of raw material for the
RMG sector.
High Demand of Yarn:
Demand of yarn is very high in Bangladesh. Local yarn meets only 3% of the total demand.
So there is a lot of opportunity for Saiham as they produce quality yarn in the country.
Increase market share by new design:
There is always demand for textile products of new designs and varieties. So there is an
opportunity for Saiham to increase its market share if they can come up with new designs and
products. 14

Threat:
New Entrants:
As the market for textile and spinning goods are really huge in Bangladesh, there are new
companies coming up with new technology. These companies have new machineries, which
are more technologically advanced. Saiham might have to face stiff competition from these
new entrances.
Smuggled Yarn and Fabric:
In Bangladesh, there are abundance of smuggled foreign yarn and fabric. These smuggled
goods are lower in price. So the local companies producing yarn and fabrics face a severe
competition from these smuggled goods. Saiham is facing the same problem of smuggled
yarn and fabric and therefore they have to fight hard to compete with these goods.



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Unstable Political Situation:
The political situation of Bangladesh is very volatile. Strikes and other problems persist all
the time, so it becomes very difficult for the businessmen to operate their business fully.
Unstable political condition is a big threat for Saiham.
Declining Law and Order Situation: The declining law and order situation is another big
threat to any company to run properly. This might cause a lot of problems for Saiham to run
properly in future.
















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Industry Analysis










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Porters 5 forces model of industry attractiveness would be used to find out the key structural
features that determine the strength of the competitive forces within the textile and spinning
industry for Saiham Textile Mills Limited.

Rivalry among Firms:

The rivalry among the competitors is a very important factor for any company to achieve
industry competitiveness. For Saiham we found out that they face serious competitions from
the companies like Dandy Dyeing, Prime Textiles, Pride Textiles, Beximco Textile etc.
We will have a look at some of the factors that decides the rivalry among the firms.
Number of Competitors: There are a huge number of competitors for Saiham. In the
competition of the Textile goods Saiham faces completion from a lot of companies as
mentioned earlier. For the yarn produced by Saiham the number of competitors is high, but
still as the market is so huge, the number of suppliers of yarn is still less than the demand of
the market.

I ndustry Growth: The textile and spinning goods market is still growing in Bangladesh, as
Bangladesh still has to import a lot of fabric and yarn from abroad. So for the producers,
there is a high chance to grow their industries to catch the untapped segment of the market.

Asset I ntensity: Saiham has a very good advantage over others as they have paid up all of
its debts. So the chances for the company to expand would not be very tough, as it can always
get new funds from its financers.
There are a lot of companies in the same business as Saiham is in. But the supply of textile
goods and yarn is yet to fulfill the demand of local market. So we cannot say that the degree
of rivalry is very intense for Saiham, rather it has very high scope to expand its business. 16





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Potential Entrants:

The entry or chance of potential entrants can create a threat to the existing companies.
Potential entrants make the competition harder and thus the existing companies often cant
cope with the new companies and loses its market share. Some of the factors make the
entrance in a business difficult. We will be seeing the factors and then get an idea whether the
potential entrants would be easy or not and how it can affect Saiham.
The factors below would give some more idea about the potential entrants and how these
could affect Saiham.
Economies of scale: Saiham has been operating for more than 20 years. In these years it
has been supplying goods all over the country. It has certainly reached economies of scale,
and there is opportunity for Saiham to expand more.
Absolute cost advantage: Saiham has absolute cost advantage, as it has plants in the rural
areas. Moreover it has got cheap sources of labor. Also the company has installed its own gas
power generator to reduce electricity cost.
Brand identity: Saiham is a common name to its target customers. Even Saiham do not
advertise much, Saiham is a common name to the people of middle income and lower middle
income. Which gives the idea that Saiham has got a distinguishable brand identity.
Access to distribution: Access to distribution is very important for any business to operate
successfully. Saiham has very few outlets. It mostly supplies goods through the wholesalers
of the country. This distribution network is not a very good one, as it makes the company
depend more on the wholesalers.
Saiham has been operating very well in the sector of fabric and yarns. The factors that affect
potential entrants are very high for Saiham. But still there is a chance for the new entrants to
enter the market, as the market is so huge. But it would not be very easy to create an impact
on Saiham, as it would take a lot of time for them to reach the cost advantage that Saiham is
getting.
Substitute Products:
The prospect of substitute products entering the market causes a great threat to the existing
companies. As the substitute products serve the same purpose as the product itself does, so a
substitute product with a competitive price can take away the market of any product. For
Saiham, the threat of substitute products is not very threatening because it would be very
difficult to come up with products that substitute the fabric, clothing or yarn.

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Bargaining power of the buyer

Bargaining power of the buyers means the ability of the customers to have a control over the
prices. When the buyers have more options they can switch from products of one company to
the products of another. If the bargaining power of the buyer is high, the companies have to
reduce the price and increase the features of its product to get the customers. As a result they
have to be satisfied with less profits. Some of the factors that affect bargaining power of the
customers are as follows.
Number of suppliers: In the industry of Textile and Spinning, there are some competitors
who can challenge Saiham. But most of the companies do offer prices of similar kinds. The
buyers therefore have to be satisfied with the prices set by the manufacturer like Saiham.
Switching cost: The products made by Saiham or other companies are not very expensive. So
the cost of switching from one brand to another is not very high for the customers.

It is clear that the bargaining power of the buyers is somewhat high in the case of Saiham.
The customers can switch from product of one brand to another. And it doesnt make them
think twice to switch from one product to another if he or the product of one brand
dissatisfies him or her. So Saiham is not in an advantageous position in this regard, as they
have to compete pretty hard to offer goods at similar prices like other companies. So they
have to compromise with their profit margin sometimes.
Bargaining power of the suppliers
The suppliers of raw materials can dominate the industries to accept the higher prices or
reduced service. The manufacturer acts as buyers at this time. If the number of suppliers is
low, then the suppliers will dominate and if the number of supplier is low the buyer will
dominate. For Saiham, number of suppliers is not low as Saiham outsource its raw material
from abroad in most cases. And once they find one supplier to charge higher prices, they can
shift to another supplier easily. So Saiham does not have to pay higher price for raw materials
and thus decrease profit because of the pressure from the suppliers.

From the analysis of Porters 5 forces model of industry analysis, we can come to this
conclusion that Saiham is not in a very disadvantageous position in the market. There is a
chance for new entrants and also there are a high number of competitors in the market. But if
we look closely we can see that the existing companies cannot provide all the needs of the
domestic market. So these threats do not work well for Saiham as there is deficit production
in the country and we have to import from abroad. Saiham has some problems too. They do
not invest much on the research and development, which might have helped to get the most

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out of the market. But overall the company is doing pretty much fine in the domestic market
of Bangladesh


















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\

Ratio Analysis








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2008 2009 2010 2011 2012

Current ratio 1.1868792
5
1.193262 1.144564 1.436804 2.331604

quick ratio 0.1309118 0.1689 0.402379 0.321582 .5227145

cash to sales
ratio
0.0063294
3
0.03908 0.022211 0.041515 0.09013


cash to total asset ratio 0.025707 0.015966 0.037128 0.461402
gross margin
ratio
0.1986655
5
0.187637 0.191715 0.262219 0.193568
return on
equity
0.09315653
6
0.02597844
8
0.02200158
4
0.03654197
9
0.03277744
4

return on asset 0.0319889
4
0.031614 0.043798 0.129773 0.042056

capital
structure
0 0 0.097055 0.059603 0.040196

total liability to equity 0.1745301
1
0.257582 0.306197 0.364135 0.43524


OI to Annual interest
payment
4.5167605
3
1.729242 1.415349 1.415349 1.415349

price Earnings
ratio
20.489416 51.01848 61.76317 50.68002 41.52539
Dividend yield 0.0166666
7
0.016667 0.016667 0.016667 0.016667
Market to book value
ratio
0.9848266
4
1.013991 1.017509 1.013856 1.009405
Asset turn over 0.2634636
4
0.311255 0.369439 0.433038 0.503433
A/R turnover 9.3024309
4
8.565817 7.5423 7.02569 6.23658
Inventory
Turnover
2.0513931
7
1.608323 1.6778323 1.808323 1.908323


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Graphical Representation of all ratios:
Liquidity condition
Current ratio:

Quick Ratio:




0 0.5 1 1.5 2 2.5
2012
2013
2014
2015
2016
2012
2011
2010
2009
2008
0 0.1 0.2 0.3 0.4 0.5 0.6
2008
2009
2010
2011
2012
2012
2011
2010
2009
2008

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Cash to sales ratio:


Cash to Total asset Ratio:




0 0.02 0.04 0.06 0.08 0.1
2008
2009
2010
2011
2012
2012
2011
2010
2009
2008
0 0.02 0.04 0.06 0.08 0.1 0.12
2008
2009
2010
2011
2012
2012
2011
2010
2009
2008

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General comment on liquidity condition
From the above charts we can easily see that Saiham textiles liquidity ratios show somewhat
stable state during 2008 to 2010. In 2011 it increased sharply and in 2012 it went very high.
Quick ratio shows slight increase in 2008 to 2009. In 2010 it increased sharply and decreased
in the next year. Like current ratio this ratio was extreme in 2012. Cash to sales ratio and cash
to total asset ratio both were very low in 2008, increased in the next year and was very high
in 2012.

Profitability Condition:
Gross margin ratio:







0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16 0.18
2008
2009
2010
2011
2012
2012
2011
2010
2009
2008

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Return on Equity:

Return on Asset:




0 0.01 0.02 0.03 0.04 0.05 0.06
2008
2009
2010
2011
2012
2012
2011
2010
2009
2008
0 0.005 0.01 0.015 0.02 0.025 0.03 0.035 0.04 0.045
2008
2009
2010
2011
2012
2012
2011
2010
2009
2008

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Some General Comments on Profitability
Ratios suggest that Saiham Tex was in a profit boost up condition in 2008 and later its
profitability declines and still now we see a decreasing pattern in profitability condition.
Firms manager should look into the matter wisely.

Leverage ratios

Capital Structure:


General comment on Capital structure
Long term Debt was taken around 9 percent cooperative to equity in 2010, in 2011 debt
financing is reduced to 6 percent and in 2012 it went to only 4 percent compared to equity
financing. Before 2010 I have not found any long term debt that was used in Saiham textile as
a means of finance.



0 0.02 0.04 0.06 0.08 0.1 0.12
2010
2011
2012
2012
2011
2010

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Turnovers
Asset turnover:

Account Receivables Turnover:


0
0.1
0.2
0.3
0.4
0.5
0.6
2008
2009
2010
2011
2012
0
1
2
3
4
5
6
7
8
9
10
2008
2009
2010
2011
2012

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Inventory Turnover:


Comment on turnover ratios
Asset turnover is showing upward trend which is a good signal. Year by
year asset is generating more sales which in turn improving the
profitability in following years.
Accounts receivables turnover is decreasing year after year which is
pretty good for Saiham Textiles, because the company is now becoming
quicker to convert accounts receivable into cash, and thus more sales will
be in the next years.
Inventory turnover was high in 2008, and then it decreased in the next
year. From 2009 we see a slight movement in Inventory turnover. The
lower the inventory turnover the higher the speed of converting inventory
into finished goods.


0
0.5
1
1.5
2
2.5
2008
2009
2010
2011
2012

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Market Ratios
Price Earnings ratios:

Market to book value Ratio:


0
10
20
30
40
50
60
70
2008
2009
2010
2011
2012
0.96 0.97 0.98 0.99 1 1.01 1.02
2012
2011
2010
2009
2008

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Some Comments about Market Ratios
P/E ratio was low in 2008 but increased after this year sharply and in
2010 it was in highest position after 2010 we see a decreasing behavior of
P/E ratio.
Market to book value ratio was about 0.98 in 2008 and after that
it goes up to 1.20 and remained almost stable in the following
years.

Comparison of Ratios with Peer Company
Saiham Textile and Makson Spinning
Particulars 2009 2010 2011 2012
Saiham Makson Saiham Makson Saiham Mak
son
Saiham Makson
Current
ratio
1.1932
62
1.2165222
62
1.144564 1.2609998
51
1.43680
4
2.668
9592
39
2.33160
4
2.44712
2396
Quick
Ratio
0.1689 0.53744794
4
0.402379 0.60303488
1
0.32158
2
1.563
1706
47
1.20125 1.47129
9974
Cash to
Asset
0.02570
7
0.00802935
8
0.015966
0.00415629
3
0.037128
0.974
5604
73
0.461402
0.89504
9724
Asset
turnover
- - 0.369439 0.49359858
9
0.43303
8
0.368
0430
72
0.50343
3
0.27414
3571
A/R
turnover
- - 7.5423 1.87165308
4
7.02569 1.744
2390
26
6.23658 1.62969
7109
Inventory
Turnover
- - 1.677832
3
1.38573195
1
1.80832
3
1.393
7508
51
1.90832
3
1.12256
6032
Return on
Equity
0.0399
52
0.10183279
5
0.085569 0.19522861
1
0.19048
2
0.022
8321
6
0.04572
7
0.00757
7241
Return on
Asset
0.0316
14
0.04245377
2
0.043798 0.07549322
6
0.12977
3
0.015
3560
81
0.04205
6
0.00498
0563








33 | P a g e



Particulars 2009 2010 2011 2012
Saiha
m
Makson Saiham Makson Saiham Maks
on
Saiham Makso
n
Gross
Margin
Ratio
0.1876
37
0.12031357
1
0.191715
0.17460297
6
0.26221
9
0.052
44892
0.19356
8
0.01842
1421
Debt to
equity ratio
0.2575
82
1.39867484
7
0.306197 1.58604144
9
0.36413
5
0.486
84809
2
0.43524 0.52136
2223
Price
Earnings
Ratio
20.489
416
24.7249965
5
51.01848 17.5165664
2
61.7631
7
75.06
76839
2
50.6800
2
156.071
582


Comments on Ratio Comparison:
Current Ratio of both companies looks ok in
2009,2010,2012 but in 2011 Saiham had very high
current ratio compared to Makson Spinning
In 2009 Saiham showed slightly higher quick ratio than
Makson, 2010,2012 seem ok but in 2011 Saiham had
very lower quick ratio compared to Makson
Cash to Asset ratio of Saiham was higher than Makson
in 2009 and 2010 significantly but in 2010 and 2011
situation reversed
In 2009, 2010,2011 asset turnover was somewhat
similar but in 2012 Saiham had very high turnover than
Makson
In every respect A/R turnover is very high for Saiham


34 | P a g e





Inventory turnover was somewhat similar for both the
companies in consecutive 4 years time frame
First two years ROE was lower for Saiham, and last
two years ROE much higher for Saiham
2009,2010,2011 was somewhat similar in return on
Asset but in 2012 Maksons Return fell sharply
compared to Saiham
Saiham was well performer in every year
Saiham has very low debt usage in compared to
Makson
First 3 years showed high EPS for Saiham but in 2012
Makson EPS was extreme which was 156 in
comparison to saihams 50 taka per share










35 | P a g e










DuPont Analysis
Red Flags
Disclosure Practices









36 | P a g e


DuPont Analysis
Period 2012 2013 2014 2015 2016

PROFIT MARGIN 0.198665546 0.187636657 0.191715091 0.262218601 0.19356844

ASSET UTILIZATION 0.263463637 0.311255161 0.369438661 0.433037907 0.503432607

ROA 0.052341147 0.058402878 0.070826967 0.113550594 0.097448665

FINANCIAL LEVERAGE 1.174530114 1.257582315 1.306197187 1.364134589 1.435240032

INTEREST BURDEN 1.746216464 0.399531907 0.268630614 0.266473716 0.264718074

AFTER TAX RETENTION
RATE
0.867776447 0.885301211 0.885301211 0.885301211 0.885301211

ROE 0.093156536 0.025978448 0.022001584 0.036541979 0.032777444
Sensitivity of DuPont
Sensitivity of Profit Margin
Period 2012 2013 2014 2015 2016
PROFIT MARGIN 0.198665546 0.155326433 0.155326433 0.155326433 0.155326433

ASSET UTILIZATION 0.263463637 0.311255161 0.369438661 0.433037907 0.503432607

ROA 0.052341147 0.048346154 0.057383589 0.067262234 0.078196391

FINANCIAL LEVERAGE 1.174530114 1.257582315 1.306197187 1.364134589 1.435240032

INTEREST BURDEN 1.746216464 0.399531907 0.268630614 0.266473716 0.264718074

AFTER TAX RETENTION
RATE
0.867776447 0.885301211 0.885301211 0.885301211 0.885301211
ROE 0.093156536 0.021505071 0.017825553 0.021645815 0.026301826

Sensitivity of Asset Utilization

37 | P a g e

Period
2012 2013 2014 2015 2016
PROFIT MARGIN 0.198665546 0.187636657 0.191715091 0.262218601 0.19356844

ASSET UTILIZATION 0.263463637 0.263463637 0.263463637 0.263463637 0.263463637

ROA 0.052341147 0.049435436 0.050509955 0.069085066 0.050998245

FINANCIAL LEVERAGE 1.174530114 1.257582315 1.306197187 1.364134589 1.435240032

INTEREST BURDEN 1.746216464 0.399531907 0.268630614 0.266473716 0.264718074

AFTER TAX RETENTION
RATE
0.867776447 0.885301211 0.885301211 0.885301211 0.885301211

ROE 0.093156536 0.021989599 0.015690338 0.022232425 0.017153566


Sensitivity of Financial Leverage
Period
2012 2013 2014 2015 2016
PROFIT MARGIN 0.198665546 0.187636657 0.191715091 0.262218601 0.19356844

ASSET UTILIZATION 0.263463637 0.311255161 0.369438661 0.433037907 0.503432607

ROA 0.052341147 0.058402878 0.070826967 0.113550594 0.097448665

FINANCIAL LEVERAGE 1.174530114 1.174530114 1.174530114 1.174530114 1.174530114

INTEREST BURDEN 1.746216464 0.399531907 0.268630614 0.266473716 0.264718074

AFTER TAX RETENTION
RATE
0.867776447 0.885301211 0.885301211 0.885301211 0.885301211

ROE 0.093156536 0.024262801 0.019783784 0.031462918 0.026823454






38 | P a g e

Sensitivity of Interest Burden
Period
2012 2013 2014 2015 2016
PROFIT MARGIN 0.198665546 0.187636657 0.191715091 0.262218601 0.19356844

ASSET UTILIZATION 0.263463637 0.311255161 0.369438661 0.433037907 0.503432607

ROA 0.052341147 0.058402878 0.070826967 0.113550594 0.097448665

FINANCIAL LEVERAGE 1.174530114 1.257582315 1.306197187 1.364134589 1.435240032

INTEREST BURDEN 1.746216464 1.746216464 1.746216464 1.746216464 1.746216464

AFTER TAX RETENTION
RATE
0.867776447 0.885301211 0.885301211 0.885301211 0.885301211

ROE 0.093156536 0.113542854 0.143019917 0.239461539 0.216216866

Sensitivity of after tax Retention Rate
Period
2012 2013 2014 2015 2016
PROFIT MARGIN 0.198665546 0.187636657 0.191715091 0.262218601 0.19356844

ASSET UTILIZATION 0.263463637 0.311255161 0.369438661 0.433037907 0.503432607

ROA 0.052341147 0.058402878 0.070826967 0.113550594 0.097448665

FINANCIAL LEVERAGE 1.174530114 1.257582315 1.306197187 1.364134589 1.435240032

INTEREST BURDEN 1.746216464 0.399531907 0.268630614 0.266473716 0.264718074

AFTER TAX RETENTION
RATE
0.867776447 0.867776447 0.867776447 0.867776447 0.867776447

ROE 0.093156536 0.025464198 0.021566057 0.035818622 0.032128606






39 | P a g e

*** The DuPont sensitivity analysis suggests that from the
following five factors of ROE interest burden is significant in
the composition. When we put a constant value for Interest
Burden the new REO goes significantly different from the
actual value, so I perhaps suggest firms manager to look
carefully the interest related aspects very carefully to generate
a good profit from operation.

Red Flags & Disclosure Practices
By analyzing Saiham Textiles annual report I have found some oddity in their report. I am
saying that all of these are for earning manipulation rather there is some scope for further
analysis in the following cases:
In 2012 there is a sudden increase of Property Plant & Equipment at a larger value
Level of Inventories is decreasing day by day but the sales and production are
increasing. I have found no reasonable disclosure regarding the inventory reduction
Trade debtors increased from 1.7 crore to 9 crore in 2010 which looks odd as I have
found no disclosure regarding this
Prepaid Expense is not following any stable pattern like in 2010 it decreased sharply
but in the very next year it was so high than before
In 2010 and 2011 short term borrowing was high and no disclosures are found
regarding these


















40 | P a g e










Analysis of Cash flow Statement
Analysis of Sustainable Growth














41 | P a g e

Free Cash flow Analysis
Free Cash Flow is a measure of financial performance calculated as operating cash flow minus capital
expenditures. Free cash flow (FCF) represents the cash that a company is able to generate after
laying out the money required to maintain or expand its asset base. Free cash flow is important
because it allows a company to pursue opportunities that enhance shareholder value. Without cash,
it's tough to develop new products, make acquisitions, pay dividends and reduce debt.




Free Cash Flow


860000000
880000000
900000000
920000000
940000000
960000000
980000000
2013
2014
2015
2016
2017
Particulars
2013 2014 2015 2016
EBIT
194022588.5 257606871.9 316077785.2 387912401.1
EBIT(1-tc)
140666376.7 186764982.2 229156394.3 281236490.8
Depreciation
55919777.53 56992005.86 53160271.76 51268330.51
Capital expenditure
830699756.4 799688006.4 771528251.6 744360017.2
Change in NWC
130787264.3 91611488.59 116261462.6 137267781
Free cash flow
896498646.3 951833505.8 937583455 939597057.6 967784969

42 | P a g e



General Comment
Firms free cash flow seems lower for 2013 but it increases in the later year. Higher free cash flow
implies higher value creation possibility. Highest FCF is shown in 2017
Analysis of Sustainable Growth
The Sustainable Growth Rate (SGR) concept by Robert C. Higgins, describes optimal growth
from a financial perspective assuming a given strategy with clear defined financial frame
conditions/ limitations. Sustainable growth is defined as the annual percentage of increase
in sales that is consistent with a defined financial policy (target debt to equity ratio, target
dividend payout ratio, target profit margin, target ratio of total assets to net sales). This
concept provides a comprehensive financial framework and formula for case/ company
specific SGR calculations.
The sustainable growth rate according to Robert C. Higgins is the maximum growth rate a
company can achieve consistent with the firm`s established financial policy. Basically, it is
calculated as:
SGR = (pm*(1-d)*(1+L)) / (T-(pm*(1-d)*(1+L)))
pm is the existing and target profit margin
d is the target dividend payout ratio
L is the target total debt to equity ratio
T is the ratio of total assets to sales
SGR of Saiham Textile
2012 2013 2014 2015 2016

Profit Margin 0.198666 0.187637 0.191715 0.262219 0.193568

Dividend Yeild 0.016667 0.016667 0.016667 0.016667 0.016667

Debt Equity Ratio 0.17453 0.257582 0.306197 0.364135 0.43524

Total asset to Sales 1.493138 1.520232 1.391132 1.118164 3.693306
SGR 0.181571 0.180124 0.215081 0.458936 0.079876



43 | P a g e




Fig: Sustainable Growth Rate
Comparison of sustainable growth rate and Real Growth rate



0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
2012
2013
2014
2015
2016
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
2012 2013 2014 2015 2016
Sustainable Growth
ROE
GM
ROA

44 | P a g e












Valuation





45 | P a g e




Income Statement forecasting (2012-2016)
Turnover ( net of VAT) 706980719 868563283 1067076027 1310959455 1610583171
Gross Profit 136849155 179585013 220629706.5 271055287.8 333005787
Net Income 109812793 44101666.6 36429476.84 44396190.33 54183720.1

Balance Sheet Forecasting
Non-Current Asset 999814258 965317326.4 929025857.5 895793455 863751523
Current Assets 1683594836 1825201164 1959345451 2131561500 2335451602
Total Asset 2683409094 2790518491 2888371308 3027354955 3199203125
Total Shareholders Equity 2284666066 2218954940 2211282750 2219249463 2229036993
Total Current Liabilities 302213350 477447115 585325033.1 718636054.6 882933430.5
Total liability 398743028 571563551.1 677088558.2 808105491.7 970166131.6
Total Liabilities and equities 2683409094 2790518491 2888371308 3027354955 3199203125

FCF & Valuation
Free cash flow 896498646.3 951833505.8 937583455 939597057.6 967784969
Present value
discount factor
0.817121133 0.667686945 0.545581113 0.445805857
Present value
of free cash
flow
732547989.2 635526805.9 511527824.8 418877871.4
Terminal value
1927736017


Enterprise
value
4226216508
Cash
1278857651
Interest-
bearing debt
322517328.2
Equity value
5182556831
Value per
share
69.10075775



EBT 126545026 49815436.9 41149245.46 50148118.84 61203711.71

46 | P a g e




Conclusion
Saiham Textile Mills Ltd. is one of the leading textile mills in the country. The company
has gained goodwill for providing quality goods and services to the customers. The
company thus gained a number of customers. They give their first preference to
customer service and customer relations, which helped them to operate successfully
these years. Also, the management of the company is very skilled and they had helped
the company to minimize the cost and maximize the profit. The company has a bright
future and they are hoping to expand the plant and work as the suppliers of raw
materials for the export oriented garments factories.
Saiham has some competitive advantages over its competitors. By using those, the
company has been able to operate its business pretty strongly for the last many years.
There are immense opportunity for the whole textile and spinning industry in
Bangladesh. If the company can avail themselves with the modern technology, it would
be grab the opportunities and would be able to expand a lot. Thus it would be able to
come out as a top player in the textile sector of Bangladesh.















47 | P a g e













Appendix












48 | P a g e


Income Statement of Saiham for five consecutive years










Particulars 2007 2008 2009 2010 2011 2012

Turnover ( net of VAT) 329877885 299738654 384689810 570302654 706980719
Less : Cost of Goods Sold 264342515 243496695 310938968 420758690 570131564
Gross Profit 65535370 56241959 73750842 149543964 136849155
Less : Operating Expenses 18086804 19013498 29288470 30382149 48336765
Operating Profit 19463609 10872245 25741912 102078980 72468121
Plus : Other
Income
419993 5884726 0 148000 44359887
Less : Financing Expense 27984957 26356216 18720460 17082835 16044269
Less : Provision For W.P.P.F 926839 797951 1225805 4867951 6327251
EBT 18536770 15959020 24516107 97359029 126545026
Less : Provision For Tax 2780516 1553178 1077421 14603854 16732233
Current Tax
Deffered Tax
Net Income 15756254 14405842 23438686 82755175 109812793
Less : Dividend
Adjustment for income tax
Divedend
Transfer to the Reserve

Actual tax payment every year 4125000 3000000 27553178 5237364 133584087

49 | P a g e


Balance Sheet of Saiham Textile for five Consecutive Years

Particulars

2008 2009 2010 2011 2012
Assets

Gross Block

Less: Depreciation
Net
Block

PPE( Net of Dep.)

241690452 247636691 254344746 252356134 865196688
Capital Work-in-Process( Mlange Unit)

134617570
Non-Current Asset

241690452 247636691 254344746 252356134 999814258
Inventories

210127650 151383986 172626204 284599985 265986848
Trade Debtors

25582021 17732588 90176034 62568728 72735277
Advances, Deposits & Prepayments

13065182 27205310 9462744 14490609 67795561
Cash & Cash Equivalents

2087938 11713861 8544404 23676231 1204764356

Current Assets

250862791 208035745 280809386 385335553 1611282042
Total Asset

492553243 455672436 535154132 637691687 2611096300
Equity &
Liabilities:

Shareholders Equity:

Share Capital

125000000 125000000 125000000 250000000 250000000
Deposit against Rights Share

500000000
Share Premium ( Rights
Share)

727500000
General Reserve & retained earnings

77600454 79246434 59638007 93607608 191873593
Revaluation Reserve

542979680
Tax Holiday Reserve

78589425

Reserve for Reinvestment

78589425 78589425

Reserve Account

76095000 76095000

Retained Earnings

1505454 1645980 10687843 90843019 189109004

Total Shareholders Equity

358790333 360576839 273915275 434450627 2401462277
Long Term
Liability:

Deffered Tax Liability

26584894 25894625 96529678


50 | P a g e



Pro forma Income Statement
2012 2013 2014 2015 2016
Turnover ( net of VAT) 706980719 868563283 1067076027 1310959455 1610583171
Less : Cost of Goods Sold 570131564 688978270 846446320.9 1039904167 1277577384
Gross Profit 136849155 179585013 220629706.5 271055287.8 333005787
Less : Operating Expenses 48336765 54900510.9 67448187.39 82863672.96 101802414
Operating Profit 72468121 124684502 153181519.1 188191614.8 231203373
Plus : Other
Income
44359887 1776000 1776000 1776000 1776000
Less : Interest Expense 16044269 72103575.8 108228813.2 132964833.2 163354344.7
Less : Provision For W.P.P.F 6327251 4541489.38 5579460.403 6854662.817 8421316.567
EBT 126545026 49815436.9 41149245.46 50148118.84 61203711.71
Less : Provision For Tax 16732233 5713770.29 4719768.623 5751928.501 7019991.616
Net Income 109812793 44101666.6 36429476.84 44396190.33 54183720.1
Less : Dividend 37500000 37500000 37500000 37500000 37500000
Transfer to the Reserve 72312793 6601666.63 -1070523.158 6896190.334 16683720.1

Current Liabilities:

Bank Loan & Overdraft

157561744 138623026 137655252 112973359 149231920
Short Term Loan

7725012 17512602 14666716 11113568 7090206
Rights Share Money Refundable

2842500
Liabilities for
Goods

125494282 134483182
Liabilities for Expenses & other Finances

43664100 17240717 91969966 133220897 143390436
Provision for Tax

2412508 965686 1049872 10881630 -341712
Current Account with FSML

57299216

Current Account with SCML

39000000


Total Current Liabilities

211363364 174342031 245341806 268189454 302213350
Total Liabilities

294084079 398743028

Total Equity & Liabilities

535154132 637691687 2611096300

51 | P a g e

Pro forma Balance Sheet

2012 2013 2014 2015 2016

PPE (Net of
Dep.)
8651966
88
8359794
75.3
80476065
4
77640194
9.3
74904256
7.9
Capital Work-in-Process(
Mlange Unit)
1346175
70
1293378
51.1
12426520
3.5
11939150
5.8
11470895
5.1
Non-
Current
Asset
9998142
58
9653173
26.4
92902585
7.5
89579345
5
86375152
3
Inventories 2779240
82.9
4283829
25.8
52629112
8.7
64657654
5
79435355
4.1
Trade
Debtors
7599956
6.53
1013987
64.4
12457375
6.2
15304546
1.9
18802446
1.4
Advances, Deposits &
Prepayments
7083816
0.81
1656182
2.79
21255731
.87
31511623.
09
39063661.
71
Current asset
other then cash
4247618
10.2
5463435
13.1
67212061
6.8
83113363
0.1
10214416
77
Cash & Cash
Equivalents
1258833
026
1278857
651
12872248
34
13004278
70
13140099
24
Current
Assets
1683594
836
1825201
164
19593454
51
21315615
00
23354516
02
Total asset other
than Cash
1424576
068
1511660
839
16011464
74
17269270
85
18851932
00
Total Asset 2683409
094
2790518
491
28883713
08
30273549
55
31992031
25
Equity &
Liabilities:

Shareholders
Equity:

Share
Capital
2500000
00
2500000
00
25000000
0
25000000
0
25000000
0
Deposit against
Rights Share
5000000
00
5000000
00
50000000
0
50000000
0
50000000
0
Share Premium (
Rights Share)
7275000
00
7275000
00
72750000
0
72750000
0
72750000
0
General
Reserve
2641863
86
1984752
59.6
19080306
9.8
19876978
3.3
20855731
3.1
Revaluation
Reserve
5429796
80
5429796
80
54297968
0
54297968
0
54297968
0
Total 2284666 2218954 22112827 22192494 22290369

52 | P a g e

Shareholders
Equity
066 940 50 63 93
Long Term
Liability:

Deferred Tax
Liability
9652967
8
9411643
6.05
91763525
.15
89469437.
02
87232701.
09
Current
Liabilities:

Bank Loan &
Overdraft
1492319
20
2965496
99.1
36432702
2.5
44759505
6.4
54989424
9.4
Short Term
Loan
7090206 2596762
9.15
31902608
.69
39194045.
62
48151962.
33
Rights Share Money
Refundable
2842500 2842500 2842500 2842500 2842500
Liabilities for Expenses &
other Finances
1433904
36
1503269
28.2
18468459
8.7
22689481
7.7
27875230
9
Provision
for Tax
-341712 1760358
.521
1568303.
243
2109634.8
35
3292409.7
51
Total Current
Liabilities
3022133
50
4774471
15
58532503
3.1
71863605
4.6
88293343
0.5
Total
liability
3987430
28
5715635
51.1
67708855
8.2
80810549
1.7
97016613
1.6
Total Liabilities
and equities
2683409
094
2790518
491
28883713
08
30273549
55
31992031
25













53 | P a g e

Calculation

2008 2009 2010 2011 2012 2013 2014 2015 2016

Sales growth -
0.091
36481
0.2834
1742
0.4825
00028
0.239
65882
7

Average sales
growth rate
0.228
55286
6
0.22
8553
0.22
8553
0.22
8553
0.22
8553
COGS in
proportion to
sales
0.80
1334
5
0.812
36334
3
0.8082
84909
0.7377
81399
0.806
43156

Average COGS in
proportion to sales
0.793
23913
3
0.79
3239
0.79
3239
0.79
3239
0.79
3239
Operating
Expense(in
proportion to
sales)
0.05
4828
8
0.063
43358
7
0.0761
35289
0.0532
73729
0.068
37069
8

Average 0.063
20841
8
0.06
3208
4
0.06
3208
4
0.06
3208
4
0.06
3208
4
Growth rate f
other income
298.7
28966
2

Average
Workers PPF 0.05
8823
6
0.055
39079
2
0.0522
98367
0.0588
23524
0.057
61852
4

0.056
59095
4
0.05
6591
0.05
6591
0.05
6591
0.05
6591
Growth on WPPF 0.00
2809
6
0.002
66215
6
0.0031
86476
0.0085
35733
0.008
94968

0.005
22873
7
0.00
5228
7
0.00
5228
7
0.00
5228
7
0.00
5228
7





Growth of PPE 0.024 0.0270 - 2.428

54 | P a g e

60270
5
88292 0.0078
18569
47496
6
0.618
08684
9

0.025 0.02
5
0.02
5
0.02
5
0.02
5
PPP 86519
6688
8868
2660
5
8568
7896
2
8248
7967
0
7958
1199
8
(-)depriciation 5084
7130
5211
8308
4847
7721
4676
9430
Net Amount 8359
7947
5
8047
6065
4
7764
0194
9
7490
4256
8
Depriciation for capital
work in progress

Gross 13461
7570
1293
3785
1
1242
6520
3
1193
9150
6
1147
0895
5
Depriciation 52797
18.9
5072
647.
6
4873
697.
7
4682
550.
6
4498
900.
4
Net Amount 12933
7851.
1
1242
6520
3
1193
9150
6
1147
0895
5
1102
1005
5

Total depriciation 5591
9778
5699
2006
5316
0272
5126
8331

Inventory in
proportion to
sales
0.63
6986
2
0.505
05326
6
0.4487
41296
0.4990
33247
0.376
22928
2

0.493
20865
2
0.49
3208
7
0.49
3208
7
0.49
3208
7
0.49
3208
7

trade debtors 0.07
755
0.059
16016
4
0.2344
12328
0.1097
11445
0.102
88155
7

0.116
74309
3
0.11
6743
1
0.11
6743
1
0.11
6743
1
0.11
6743
1

Advances,deposit
s&payments
0.03
9606
1
0.090
76343
6
0.0245
98374
0.0254
0863
0.095
89449
8

0.055 0.05 0.05 0.05 0.05

55 | P a g e

25421
1
5254
2
5254
2
5254
2
5254
2

Bank loans and
over drafts to
sale
0.47
7636
6
0.462
47964
4
0.3578
34412
0.1980
93693
0.211
08343
7

0.341
42555
3
0.34
1425
6
0.34
1425
6
0.34
1425
6
0.34
1425
6

Short term loans 0.02
3417
8
0.058
42623
8
0.0381
26084
0.0194
87141
0.010
02885
3

0.029
89722
2
0.02
9897
2
0.02
9897
2
0.02
9897
2
0.02
9897
2
Provision for
tax(on EBT)
0.15 0.097
32289
3
0.0439
47475
0.1499
99996
0.132
22355
3

0.114
69878
9
0.11
4698
8
0.11
4698
8
0.11
4698
8
0.11
4698
8

Liabilities for
expences & other
Finance
0.13
2364
4
0.057
51916
5
0.2390
75649
0.2335
96839
0.202
82085
8

0.173
07538
9
0.17
3075
4
0.17
3075
4
0.17
3075
4
0.17
3075
4

Total loans 1652
8675
6
15613
5628
152321
968
12408
6927
15632
2126
3225
1732
8
3962
2963
1
4867
8910
2
5980
4621
2
Average loan 16071
1192
154228
798
13820
4447.5
14020
4526.
5
4788
3945
4
7187
4695
9
8830
1873
3
1.08
5E+0
9
INTEREST 0.174
13197
3
0.1708
90368
0.1354
5483
0.121
84225

0.150
57985
5
0.15
0579
9
0.15
0579
9
0.15
0579
9
0.15
0579
9
Provision for tax 0.00
7313
3
0.003
22176
0.0027
29139
0.0190
80448
-
0.000
48334

0.006
37226
9
0.00
6372
3
0.00
6372
3
0.00
6372
3
0.00
6372
3

56 | P a g e

Deferred tax
liability Growth
-
0.0259
64708
2.727
78821
9

-0.025 -
0.02
5
-
0.02
5
-
0.02
5
-
0.02
5

Growth of
general reserve
0.021
21095
8
-
0.2474
3608
0.5695
96516
1.049
76494

0.348
28408
4
0.34
8284
1
0.34
8284
1
0.34
8284
1
0.34
8284
1


adjustment of reserve on
Current asset

Amount 7231
2794
weight
Inventories 26598
6848
0.1650
77771
11937
234.85

Trade Debtors 72735
277
0.0451
41245
32642
89.532

Advances, Deposits &
Prepayments
67795
561
0.0420
75539
30425
99.811

Cash & Cash
Equivalents
12047
64356
0.7477
05445
54068
669.81

Total 16112
82042
1 72312
794










57 | P a g e

Change in Working Capital
Particulars 2012 2013 2014 2015 2016

Inventories 265986
848
428382
926
5262911
29
646576
545
794353
554
Trade
Debtors
727352
77
101398
764
1245737
56
153045
462
188024
461
Advances, Deposits &
Prepayments
677955
61
165618
23
2125573
1.9
315116
23
390636
62
Non-cash Current
Assets
406517
686
546343
513
6721206
17
831133
630
1.021E+
09

Liabilities for Expenses &
other Finances
143390
436
150326
928
1846845
99
226894
818
278752
309
Provision for
Tax
-341712 176035
8.5
1568303
.24
210963
4.8
329240
9.8

Total NON- STD currenl
liability
143048
724
152087
287
1862529
02
229004
453
282044
719
Working
capital
263468
962
394256
226
4858677
15
602129
177
739396
958
NWC 130787
264
9161148
8.6
116261
463
137267
781

Free Cash flow and Valuation

Particulars 2013 2014 2015 2016
EBIT 19402258
8.5
25760687
1.9
31607778
5.2
38791240
1.1

EBIT(1-tc) 14066637
6.7
18676498
2.2
22915639
4.3
28123649
0.8

Depreciation 55919777
.53
56992005
.86
53160271
.76
51268330
.51

Capital
expenditure
83069975
6.4
79968800
6.4
77152825
1.6
74436001
7.2

Change in
NWC
13078726
4.3
91611488
.59
11626146
2.6
13726778
1

Free cashflow 89649864
6.3
95183350
5.8
93758345
5
93959705
7.6
9677849
69

Present value discount
factor
0.817121
133
0.667686
945
0.545581
113
0.445805
857


58 | P a g e

Present value of free
cash flow
73254798
9.2
63552680
5.9
51152782
4.8
41887787
1.4

Terminal value 1927736
017

Enterprise
value
42262165
08

Cash 12788576
51

Interest-
bearing debt
32251732
8.2

Equity value 51825568
31

Value per
share
69.10075
775


Change in WC

Risk-free rate 0.08
Market return 0.12
Beta 1.3420459
Cost of equity 0.24104551
Cost of debt 0.15057986
After tax cost of debt 0.1091704

Total market value of equity 2145000000
Book value of debt 322517328
Weight of equity 0.86929481
Weight of debt 0.13070519

WACC 0.22380875

Number of shares outstanding 75000000





59 | P a g e


1 Provision For Tax
2 Short term liabilities
3 Short term Assets
4 Current accounts with FSM: Added to Liabilities for
expenses & other Finance
5 Current accounts with CSM: Added to Liabilities for
expenses & other Finance.
6 Reserves for Reinvestment Transferred to Tax Holiday
Reserve
7 Tax Holiday Reserve transferred to share capital as
stock dividend.
8 Reserve account was transferred to General Reserve in
2010
9 Profit on Sale of capital asset transferred to other
income
10 Rent revenue of the last year is taken as a fixed
income for other income
11 Total loan consist on only short term loans.

13 Financing expense was a part of operating expense.
We separate it to show the relationship to interest bearing debt


60 | P a g e

14 lease expense was a part of financing expense. We
separate it and keep remain in the operating expense to show
the impact of interest. On the other hand as it will be
determined according to sales so this activity will not change the
condition.
15 Provision for WPPF is on profit. But if we wait until
profit is calculated then in cannot be calculated. Actually a
company can make adjustment for it after profit is recognized.
But w cannot .So we will use growth rate of it.

16 Provision for tax shows negative balance because of
over payment. But it is unusual. So we take positive balance.

17 Deferred tax liability: Company charges 15% tax
regularly
18 General reserve and Retained earnings were merged.

19 Dividend policy: recently company has collected a
huge amount share capital from the market. The money was
invested in long term asset like land, building etc. So dividend in
the future year may not rise so high. We assume 15% dividend.
As the company is in a category share so it have to pay at least
10% to retain the position according to law of Bangladesh

20 Payment of dividend: Dividend cannot be paid on
respective years. So dividend of a year adds to next years
reserve. But we add it on that year.

61 | P a g e

21 An adjustment was made for transferring next year's
reserve to this year. Adjustment was made with current asset
according to their proportion.
22 The company is at 27.5 % income tax Margin

Calculation of Beta

Date DSE Gen Saiham Saiham return Market return
31.12.2012 4,219.31 28.6 -0.201117318 0.00
29.11.2012 4,210.58 35.8 -0.060367454 (0.06)
31.10.2012 4,493.92 38.1 -0.113953488 (0.01)
30.09.2012 4,544.41 43 0.726907631 0.02
30.08.2012 4,446.87 24.9 0.147465438 0.07
30.07.2012 4,159.17 21.7 -0.035555556 (0.09)
28.06.2012 4,572.88 22.5 -0.169741697 (0.03)

31/05/2012
4,734.33 27.1 -0.045774648 (0.07)

30/04/2012
5,098.90 28.4 -0.109717868 0.02

29/03/2012
4,990.32 31.9 -0.00931677 0.06

29/02/2012
4,695.41 32.2 0.045454545 0.13

31/01/2012
4,153.96 30.8 -0.488372093 (0.21)

29/12/2011
5,257.61 60.20 0.135849057 (0.00)

30/11/2011
5,268.55 53.00 0.125265393 0.05

31/10/2011
5,036.50 47.10 -0.297014925 (0.15)

29/09/2011
5,910.20 67.00 -0.198564593 (0.05)

25/08/2011
6,212.00 83.60 -0.022222222 (0.04)

31/07/2011
6,459.62 85.50 0.333853354 0.06

30/06/2011
6,117.23 64.10 -0.00620155 0.06
31/05/2011 5,758.26 64.50 -0.155759162 (0.05)
28/04/2011 6,050.85 76.40 -0.188097768 (0.05)
31/03/2011 6,352.10 94.10 0.441041348 0.22
28/02/2011 5,203.08 65.30 -0.54111033 (0.30)

62 | P a g e

31/01/2011 7,484.23 142.30 -0.103339635 (0.10)
30/12/2010 8,290.41 158.70 -0.91211408 (0.04)
30/11/2010 8,602.44 1805.75 0.25551886 0.08
31/10/2010 7,957.12 1438.25 0.343217371 0.12
30/09/2010 7,097.38
1,070.75
0.89011474 0.07
31/08/2010 6,657.97 566.50 0.464770524 0.05
29/07/2010 6,342.76 386.75 0.121827411 0.03
30/06/2010 6,153.68 344.75 -0.04567474 0.01
31/05/
2010
6,107.81 361.25 -0.037949401 0.08
29/04/
2010
5,654.88 375.50 -0.001993355 0.01
31/03/
2010
5,582.33 376.25 0.01826793 0.00
28/02/
2010
5,560.56 369.50 0.055714286 0.04
30/01/
2010
5,367.11 350.00 0.137286759 0.18
30/12/
2009
4,535.53 307.75 -0.109906001 0.04
26/11/
2009
4,380.95 345.75 -0.046864232 0.30
29/10/
2009
3,364.26 362.75 -0.08627204 0.09
30/09/
2009
3,083.89 397.00 0.42039356 0.05
31/08/
2009
2,941.28 279.50 0.170680628 0.01
30/07/
2009
2,914.53 238.75 0.372126437 (0.03)
30/06/
2009
3,010.26 174.00 0.126213592 0.17
31/05/
2009
2,572.18 154.5 0.036912752 0.01
30/04/
2009
2,554.36 149 -0.179063361 0.04
31/03/
2009
2,446.92 181.5 0.105022831 (0.05)
26/02/
2009
2,570.96 164.25 0.25862069 (0.03)
29/01/
2009
2,649.49 130.5 0.149779736 (0.05)
30/12/2008 2,795.34 113.5 0.11002445 0.13
30/11/2008 2,468.92 102.25 -0.234082397 (0.10)
30/10/2008 2,748.60 133.50 0.07444668 (0.07)
25/09/2008 2,966.82 124.25 0.031120332 0.06
31/08/2008 2,791.20 120.5 -0.087121212 0.01
30/07/2008 2,761.05 132 -0.070422535 (0.08)
30/06/2008 3,000.49 142.00 -0.03891709 (0.05)
29/05/2008 3,167.99 147.75 -0.134699854 0.03
30/04/2008 3,072.85 170.75 0.191972077 0.02
31/03/2008 3,016.49 143.25 0.443324937 0.03

63 | P a g e

28/02/2008 2,931.38 99.25 0.039267016 0.01
31/01/2008 2,907.17 95.5



Covarience 0.01236976
Varience of market return 0.00921709
Beta 1.3420459
Market return
0.01

Market rerurn yearly
0.13




Calculation of Depreciation

Calculation for
PPP



V
alues

WEIGHT D
ep
To
tal

land& Land
development
11660
0000
0.1
34767
0 0
Factory
building
17355
4435
0.2
005954
0
.05
0.
01003

Building of office
space
47847
731
0.0
553027
0
.05
0.
002765

Plant and machinary 52111
5884
0.6
023092
0
.075
0.
045173

F
urniture
97599
3
0.0
011281
0
.1
0.
000113

Motor
vehicle
17092
12
0.0
019755
0
.15
0.
000296

Sundry
Asset
21608
96
0.0
024976
0
.1
0.
00025

Office
equipment
12325
96
0.0
014246
0
.1
0.
000142

86519
6688
1.0
000001
0
.1
0.
058769



64 | P a g e


Calculation for Capital work in progress farmland unit

L
and
29023
192
0.2
155974
0 0
Factory
building
10559
4378
0.7
844026
0
.05
0.
03922

13461
7570
1 0.
03922


Bibliography

www.Saihamtex.com
www.investopedia.net
www.wikipedia.com
www.bgmea.com
www.pearsonbooks.edu
www.texindustries.net
www.invoinfo.com