Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
To
Mominul Hoq
Course Instructor
FBS, BUP
Subject: Submission of Term Paper on Finance.
Dear Sir,
It is a great pleasure for me to get the opportunity to prepare a Term paper under your
supervision. I am a 3rd Semester student in Bangladesh University of Professionals. I was
prescribed by you to write a term paper on Application of Long Term Financing in Bangladesh
from the context of a company and I have chosen IDLC as my company. Here is the paper I
have prepared with your kind co-operation. While preparing the paper I enthusiastically and
honestly have devoted my best effort. I hope that you would be kind enough to consider the
mistakes I have done while preparing the paper. Surely, it has enriched my knowledge. I am
submitting this paper for your kind perusal. I will be honored to provide any additional
information, if necessary.
Sincerely yours
Zerin Anjum Khan Lora
B1506065
BBA 2015, SEC A
FBS,
Bangladesh University of Professionals
It does not infringe on the right of others and does not contain any libelous or unlawful
statements.
It has neither been submitted for publication nor published elsewhere in any print form.
I assign all the copyright of this article to the term paper and have not assigned any kind
of rights for its publication to any other publisher(s).
Thank you ,
.
Acknowledgement
My first acknowledgement goes to the Almighty Allah for bestowing me with the patience. He is
the one who gave me courage to finish the task within its deadline.
Heartiest thanks go to my faculty Mominul Hoq Sir. His knowledgeable lectures and guidance
helped me a lot to build confidence and provided a guideline in completing this project. The
blessing, help and guidance given by her time to time shall carry me a long way in the journey of
life on which I am about to embark.
I would like to thank my faculty again for giving me this wonderful opportunity to get to know
about Application of Long Term Financing in Bangladesh. It gave me an overall idea and helped
me to solve the task assigned to me. I have put my best effort and hope that I have accomplished
the job to present an all-round and complete assignment.
Lastly, I thank Almighty, my parents, my brother, and friends for their constant encouragement
without which this report would not be possible.
EXECUTIVE SUMMARY
A Firm initially started with Lease Financing as our core product, IDLC has
grown to become the largest multi-product Non-Bank Financial Institution of
Bangladesh, with almost equal focus in Corporate, Retail and SME
sectors. Moreover , IDLC has a significant presence in the Capital Markets.
The merchant banking arm, IDLC Investments Limited, a wholly-owned
subsidiary of IDLC is a premier brand for investment banking in the country.
The stock brokerage arm, IDLC Securities Limited, another wholly-owned
subsidiary of IDLC is also amongst the top five brokers in the country.
IDLC aspires to be one of the major contributors to the economy of
Bangladesh through its contribution to the national exchequer, as well as
through creation of employment (both direct and indirect). As a pioneer in
the non-bank financial institution (NBFI) sector of Bangladesh, IDLC
represents a shining example of institutional excellence. Besides being a
catalyst in fostering the countrys economic and developmental progress, the
Company has helped entrepreneurs realise their dreams and achieve their
goals and enabled consumers to live a better quality of life. The Companys
sustainable and consistent success in shareholder value creation is hence a
result of concerted efforts to emerge as a role model in the sector that it
stewards and it does so through a time-tested business strategy and a
corporate culture that nurtures governance and environmental and social
responsibility. The Company is also anchored by a passionate and
professional team that is focused on achieving long-term corporate plans
while at the same time are assured of sound prospects for career
advancement.
Contents
Topic..............................................................................................................6
1. Company profile.........................................................................................7
1.1 Product....................................................................................................7
1.2 HISTORY...............................................................................................12
1.3 UNIQUENESS........................................................................................14
1.4 DEPTH...................................................................................................15
2. LONG TERM FINANCING...........................................................................16
3. LONG TERM FINANCING IN BDANGLADESH MARKET................................18
4. LONG TERM FINANCING IN IDLC...............................................................19
5. SHAREHOLDING COMPOSITION OF IDLC FINANCE LIMITED......................21
6. DEPOSITE RATES OF IDLC.........................................................................22
7. CREDIT RATING........................................................................................24
8. FINANCIAL HIGHLIGHTS OF IDLC..............................................................25
9. IDLCS PERFORMANCE.............................................................................27
10. References.............................................................................................30
TOPIC
IDLC
1.
Company profile
1.1 Product
Corporate Division
Corporate Finance
We have extensive knowledge, expertise and experience to offer a range of
financial solutions in response to the needs of a broad spectrum of clientele,
comprising of local and multinational corporate houses in Bangladesh.
Lease Financing
Asset backed financing against industrial machinery, commercial
equipments, office equipments, generators, vehicles, vessels, engines, etc.
Project Financing
For setting up of a new unit as addition to the existing product line and
capacity, a new concern of an existing group, a new Joint Venture project of
an existing company, etc.
Specialized Products
For matching the repayments with cash flows, allowing some more time for
repayment, releasing working capital limits
7
Structured Finance
Structured Finance refers to the process of designing and managing complex
financial transactions to meet the unique financial needs of large corporate
clients that cant be matched by conventional financial products.
Fund-Raising
Asset backed financing against industrial machinery, commercial
equipments, office equipments, generators, vehicles, vessels, engines, etc.
Advisory Services
For meeting various regular capital/fixed expenditures like balancing of
production line, modernization of manufacturing process, expansion of
capacity and space, etc.
Securitization of Assets
IDLC offering working capital financing to assist companies in carrying out
day-to-day business operations
Consumer Division
Deposit Schemes
You can now earn more with our various attractive Deposit Schemes.
Home Loan
As one of the leading Home Loan providers in the country, we offer you the
most convenient Home Loan facility to suit your needs. With so many
attractive benefits, the home you always wanted is no longer a dream.
Car Loan
In todays age, owing car is no longer considered a luxury; rather it has
become a vital part of our everyday life. A car is now a useful investment
that improves your quality of life.
Personal Loan
We understand your all out efforts to improve the quality of life, but
necessities no longer wait for your savings to accumulate.
RegistraLoan
"RegistraLoan", the first loan of its kind in Bangladesh, is a secured loan
facility for property buyers and possession-holders for securing ownership of
apartment, commercial space and land.
SME Division
Small Enterprise Finance
IDLC offers financing facilities to small-scale enterprises for carrying out their
trading, manufacturing or service business. Moreover, financing facilities for
developing commercial real estate can also be availed by such enterprises.
Supplier Finance
Supplier Finance is a revolving financing facility offered against receivables
created due to supply of goods or delivery of services on credit.
JICA-SME Loan
SME Loan by JICA is a loan facility under the two-step fund, provided by Japan
International Cooperation Agency (JICA) offered to small and medium
business enterprises of Bangladesh.
Capital Market
Portfolio Management
IDLC offers Portfolio Management services to both individual and institutional
investors through our subsidiary, IDLC Investments Limited. Investors can
avail our services through our discretionary investment accounts Easy
Invest, MAXCAP, Profit-Loss Sharing Scheme, Capital Protected Scheme,
Portfolio Advisory Service and Cap Invest.
Investment Banking
With a rich experience in Investment Banking, we assist our clients to our
best throughout the IPO process, along with sustained market support.
Brokerage Services
11
1.2 HISTORY
23rd May 1985, the IDLC of Bangladesh Limited was consolidated as a joint
venture public organization with the multinational cooperation of five foreign
and three local money related establishments. Presently, IDLC is one of the
main twenty organizations in the nation with various product offerings. The
organization has approved capital of BDT 1,000,000,000/ - (10,000,000
shares of Taka. 100 each) and paid up capital of BDT 200,000,000/ (2,000,000 conventional shares of BDT 100 each).
The organization plotted its vital center for administration expansion in 1994
by launching its deposit schemes. In 1997, IDLC presented Real Estate
Financing and Short term Financing. Amid the time of 1998 and 2006, the
organization widened its exercises into the ranges of corporate financing,
underwriting, issue management, syndication and other speculation
managing an account related administrations and advanced as a genuinely
multi item money related establishment.
12
13
1.3 UNIQUENESS
IDLC was initially established in Bangladesh in 1985 through the
collaboration of International Finance Corporation (IFC) of the World Bank,
German Investment and Development Company (DEG), Kookmin Bank and
Korean Development Leasing Corporation of South Korea, the Aga Khan Fund
for Economic Development, the City Bank Limited, IPDC of Bangladesh
Limited, and Sadharan Bima Corporation. As the company evolved, initial
foreign shareholding of 49% was gradually withdrawn and the last foreign
shareholding was bought out by local sponsors in 2009.
Although we initially started with Lease Financing as our core product, IDLC
has grown to become the largest multi-product Non-Bank Financial Institution
of Bangladesh, with almost equal focus in Corporate, Retail and SME sectors.
Moreover , IDLC has a significant presence in the Capital Markets. Our
merchant banking arm, IDLC Investments Limited, a wholly-owned subsidiary
of IDLC is a premier brand for investment banking in the country. Our stock
brokerage arm, IDLC Securities Limited, another wholly-owned subsidiary of
IDLC is also amongst the top five brokers in the country .
Over the years, IDLC has attained a significant presence in the corporate
sector of Bangladesh. IDLC is highly respected by our clients, peers,
employees and regulators for our strong corporate governance, statutory
compliance, high ethical standards, a progressive and enabling working
environment, and strong commitment to environmental and social
development.
14
1.4 DEPTH
IDLC Securities Limited
IDLC Securities Limited, a fully-owned subsidiary of IDLC, offers full-fledged
international standard brokerage services for both our retail and institutional
clients. It has seats on both Dhaka Stock Exchange Limited and Chittagong
Stock Exchange Limited. It is also a Depository Participant (DP) of Central
Depository Bangladesh Limited (CDBL).
office of the Company is situated at D.R. Tower (4th Floor), 65/2/2, Bir Protik
Gazi Dostogir Road, Paltan, Dhaka. It is a subsidiary Company of IDLC
Finance Ltd that holds 99.99% ownership of the Company.
The principal objective of the company is to carry out the business of asset
management, primarily, through launching and managing mutual funds to
cater to the diverse needs of investors. Besides, institutional fund
management, IDLC AML also aims at creating avenues for alternative
investments through private equity and venture capital.
2.
16
EXPERTS SAY
Focus on small and medium companies"Retail investors should never stop investing in equities. Over a period of 510 years, equities have outshone almost all other asset classes. This is true
not only for the Indian market but globally as well."
- C.J. George, Managing Director, Geojit BNP Paribas Financial Services
Bet on a secular growth trajectoryThe focus should be on picking fundamentally strong companies at right valuations. It is
always better to invest in a staggered and systematic manner."
- Gaurav Dua, Head of Research, Sharekhan
The markets offer ample scope for gains"Expect FII flows to remain buoyant because of the strength in the domestic economy
and corporate earnings. Currently, we prefer low-value, mid-cap stocks."
- Dipen Shah, Senior Vice-President, PCG Research, Kotak Securities
Big brands and large-caps are the way to go"2010 is a difficult year to predict since we are trading at 16-18 times PE multiples and
there is a lot of uncertainty on account of factors like monetary policy, monsoons, global
economy and inflation."
- Amar Ambani, Vice-President (Research), India Infoline
17
Time to catch the tide"In the boom years of 2006 and 2007, 124 countries grew at over 4 per cent. In the next
four years, only a few countries will grow rapidly and India will get a disproportionate
share of attention and FII inflows."
- Sandip Sabharwal is CEO, Portfolio Management Services, Prabhudas Lilladher
Adopt a theme-based strategy"An ideal portfolio should be built around the India growth story. This consists of
multiple themes, including consumption, asset creation, financial inclusion and
technology innovation."
- Pallav Sinha, MD and CEO, Fullerton Securities
3.
LONG TERM FINANCING IN
BDANGLADESH MARKET
Long Term Financing Facility (LTFF) under the Financial Sector Support Project (FSSP)
The Government of Bangladesh (GOB) has signed a Financing Agreement (FA) on
June 30, 2015 with the International Development Association (IDA) regarding
implementation of the
Financial Sector Support Project (FSSP). The objective of the project is to improve
financial market infrastructure of the country, regulatory and oversight capacity of
Bangladesh Bank and access to long term financing mainly for manufacturing firs in
Bangladesh. Bangladesh Bank has also signed a Project Agreement (PA) with the
IDA on the same date to carry out the tasks for implementation of the project.
Supporting Long Term Finance is the major component of the project. Under the
arrangement, Bangladesh Bank will provide long term financing in foreign currency
18
mainly for small and medium scale manufacturing enterprises in the country as
detailed in the attached Operations Manual. The financing would be provided to
eligible Participating Financial Institutions (PFIs) for on lending/refinancing to the
eligible firm.
4.
Bridge Financing
21
5.
SHAREHOLDING COMPOSITION OF
IDLC FINANCE LIMITED
22
Sl.No.
Name Of Shareholders
No.Of Shares
AS A % OF TOTAL
01.
Sponsors/Directors
The City Bank Limited
60,854,056
24.21
Transcom Group
33,515,443
13.33
20,109,375
8.00
- Transcraft Limited
10,088,022
4.01
3,318,046
1.32
19,151,663
7.62
18,852,538
7.50
17,595,702
7.00
149,969,402
59.66
17,523,641
6.97
LR Global
5,684,354
2.26
BNYM
3,371,785
1.34
2,513,671
1.00
27,089,551
10.78
56,183,002
22.35
45,214,783
17.99
Sub-Total
45,214,783
17.99
Total Holdings
251,367,187
100.00
Sub-Total
02.
General
Institutions
ICB
Other Institutions
Sub-Total
Individuals
General Public (Individuals)
23
6.
Term
Institutional
(Any Amount)
3-15 months
7.25%
7.00%
2 Years
7.50%
7.00%
3, 4 & 5 Years
7.50%
7.00%
Individual
(Any Amount)
Institutional
(Any Amount)
500 Days
7.25%
7.00%
24
1 Year
BDT 605
Term
2 Years
BDT 625
11 years
3-5 Years
BDT 625
1 Year
BDT 1,815
2 Years
BDT 1,875
3-5 Years
BDT 1,875
7.
CREDIT RATING
Date of
Valid Till
Rating
Long Term
Short Term
Outlo
25
Declaration
Action
Rating
Rating
ok
April 14,
2017
Surveillanc
AAA
e
ECRL-1
Stable
April 14,
2016
Surveillanc
AAA
e
ECRL-1
Stable
May 08,
2015
Surveillanc
AAA
e
ECRL-1
Stable
May 08,
2014
Surveillanc
AAA
e
ECRL-1
Stable
May 08,
2013
Initial
ECRL-1
Stable
8.
AAA
FINANCIAL PERFORMANCE
Financial Performance 2011
2012
2013
2014
2015
Growth
Total assets
31,165
37,784
50,429
58,927
73,434.45
24.62%
25,299
32,492
43,951
51,371
64,154.04
26
24.88%
16,828
22,008
29,064
35,240
46,038.68
30.64%
BDT in million
OPERATIONAL PERFORMANCE
2011
2012
2013
2014
2015
Growth
Operatio
nal
Performa
nce
Operational income
2,160
2,403
2,761
3,658
4,587.90
25.43%
Operational expenses
913
1,058
1,243
1,464
1,647.79
12.58%
Financial expenses
2,364
3,103
4,138
4,543
4,833.19
6.39%
1,217
1,252
1,325
2,187
2,628.50
20.21%
500
713
669
1,246
1,459.22
17.16%
BDT in million
FINANCIAL RATIOS
27
Financial Ratios
6.83
7.05
8.40
8.03
8.43
0.40
1.51
1.40
1.32
1.48
1.54
0.06
1.72
2.07
1.52
2.28
2.20
(0.07)
1.99
2.84
2.66
4.95
5.81
0.85
2.50
3.00
3.00
3.50
2.50
(1.00)
1.81
3.26
4.77
4.69
3.93
(0.75)
EQUITY STATISTICS
Equity Statistics
2011
2012
2013
2014
2015
Grow
th
99,000,
000
123,750,
000
160,875,
000
201,093,
750
251,367,
187
25.00
%
138.50
91.90
62.90
74.70
63.60
14.86
%
15.84
18.67
21.33
25.97
30.97
19.27
%
Market capitalization
(Taka in million)
13,711.
50
11,372.6
3
10,119.0
4
15,021.7
0
15,986.9
5
6.43
%
28
98.29
44.49
29.57
42.24
32.63
22.76
%
Shareholders' equity
(Taka in million)
3,980.4
7
4,693.29
5,362.76
6,527.83
7,785.96
19.27
%
9.
IDLCS PERFORMANCE
The year 2015 proved to be a pivotal year in our efforts to optimize our
business model for driving future growth. Despite several challenges on the
political and economic fronts that led to sluggish industrial growth and weak
consumption, IDLC reported a respectable performance during the year
under report, a testimony of its robust business model. The company
reported Net Interest Income of Taka 3,418 million, and Net Income after Tax
of Taka 1,459 million in 2015, which contributed to the shareholders equity
20.39% for the year. This demonstrates effective deployment of capital and
resources as IDLC Finance Limited continues to outperform its peers in this
area. Amid efforts to enhance our future growth prospects, we remained
vigilant in strengthening the balance sheet and maintaining a solid credit
profile. Total assets increased by over 24.6% to Taka 73,434 million at
December 31, 2015. Asset quality remains a top priority, with our
performance measures of nonperforming asset and reserves exceeding the
averages of our peer group.
The Companys SME division continued to grow at a steady pace on the back
of robust customer relationships and swift loan processing and turnaround
times. The division disbursed Taka 15,656 million in 2015 and registered a
portfolio growth of 24.92% to Taka 22,368 million. Refinancing receipts
29
amounted to Taka 3,020 million in 2015, making IDLC one of the largest
participants of the refinancing programs of the Bangladesh Bank and other
low-cost fund providers. Our focus on driving entrepreneurship among
women resulted in disbursements (under women entrepreneur loans)
growing 40% to Taka 2,004 million during the year under report. IDLC has
launched two new SME Products: IDLC Purnota and IDLC Udbhabon; and
three new refinancing schemes - IDLC Pinion, IDLC Startup Financing, and
IDLC Dairy Financing in partnership with SME Foundation and Bangladesh
Bank that further enhanced the SME profile. In 2015, the Structured Finance
Department (SFD), which is a segment of Corporate Division, attained a
satisfactory fee income of Taka 60.03 million. While many other players in
the industry were struggling to survive, SFD arranged subordinated bonds for
commercial banks, arranged Taka 5.00 billion in the form of coupon bearing
subordinated bonds for one of the largest banks in the country and also
arranged Taka 3.55 billion as commercial paper for 4 (four) eminent
corporate houses of the country. The Corporate Division (overall), has
attained a 10.72% growth in cumulative divisional portfolio to Taka 10,623
million by the end of the year. Despite the market vulnerabilities, both IDLC
Investments Limited (IDLCIL) and IDLC Securities Limited (IDLCSL), IDLCs
wholly-owned subsidiaries operating in the capital markets, demonstrated a
resilient performance during the year under report. IDLCIL attained an
impressive net profit after tax of Taka 119.32 million while IDLCSL achieved a
strong growth in net profit of 147.02% to Taka 96.08 million in 2015.
Particulars
IDLC Group
2015
2014
3,417.99
1,169.91
4,587.90
1,647.79
2,940.11
311.61
2,888.77
768.95
3,657.72
1,463.65
2,194.07
7.55
2,628.50
1,169.28
1,459.22
2,186.53
941.02
1,245.51
Growth
(%)
18.32%
52.14%
25.43%
12.58%
34.00%
4027.28
%
20.21%
24.26%
17.16%
*As instructed by Bangladesh Bank (BB), the Company started to follow BBs
provisioning policy for financial institution from September, 2014 instead of
30
31
10. References
http://www.cbpp.org/blog/expert-group-proposes-long-term-care-financing-reforms
http://www.dsebd.org/displayCompany.php?name=IDLC
http://idlc.com/about.php
http://idlc.com/producta_services.php
http://www.investopedia.com/terms/l/longtermdebt.asp
http://www.businesstoday.in/moneytoday/cover-story/experts-picks-for-longtermwealth/story/8624.html
http://www.cbpp.org/blog/expert-group-proposes-long-term-care-financing-reforms
https://www.unglobalcompact.org/system/attachments/21669/original/2012_Sustain
ability_Report_IDLC.pdf?1367300036
http://blogs.worldbank.org/voices/long-term-finance-infrastructure-essential-endingpoverty
32