We were given an assignment to find out the Financial scenario of managing working capital in Bangladesh. To get a good understanding of the topic, we first analyzed the theoretical methods of managing working capital. Based on our theoretical understanding we selected cement firms is one of the booming industries in Bangladesh now, we decided to pick all four firms from this industry, so that we can collect full scenario at least of one industry, with the help of descriptive financial statement analysis. We managed to collect all the relevant data and identified majority of the similarities and differences between theories and practical of working capital management. When we pick up the company we found out their position in some extent very much good but sometimes very much fluctuation.
Cement Industries in Bangladesh
Industry Overview: Growth & Present Scenario
The cement industry of Bangladesh is a rapidly developing sector of the economy. There are 70+ cement factories in Bangladesh and daily production capacity is 16.687 Million MT. Over the years, the amount of construction projects have followed an increasing trend as the urban growth rate has boosted all across the country in places like Chittagong, Bogra, Mongla and others in addition to the expanding capital city, Dhaka. Currently, domestic production is unable to meet the complete demand for cement. Approximately 60% of the demand is met by the local cement industry while the rest is imported. According to the Banglapedia, per capita consumption of cement in the country (38 kg) is fairly low compared to India (89 kg), Indonesia (127kg), Malaysia (582 kg) and Thailand (642 kg). Cement has not traditionally been a major product for the country due to low availability of required natural resources to produce it. In addition to that, in less developed regions cement was not a required raw material for construction of buildings. Over the years, however, cement emerged as a substitute to traditional construction materials and by the mid-1980s, with an increase in hefty infrastructure projects, accelerated rate of urbanization and increased construction of multistoried buildings, there was a sharp increase in its demand. One intriguing aspect of this industry is the reliance on the import of clinker. Except Lafarge Surma Cement Ltd., a multinational cement manufacturing company, all cement manufacturers go through the expensive of importing clinker which involves high freight cost, import duties and other handling charges. Hence, this is a scope for other companies to minimize costs by producing the raw material locally and increasing their competitive performance. We are measuring the liquidity position on four cement industries in Bangladesh are as following: Lafarge Surma Cement Ltd. : Lafarge/cement mills is setting up the only modern, integrated cement manufacturing plan known as Lafarge Surma Cement Ltd. in Bangladesh at Chattak under Sunamgonj district. The majority of Lafarge Surma Cement Ltd. Shareholding (60%) is held by a 50/50 joint venture company between Lafarge and cements molins. Founded in 1833, Lafarge operates in 75 countries, employing 77,000 people. In 2002, the group generated annual sales of Euro 14.6 billion and globally holdstop ranking positions in Cement, Aggregates & Concrete, Roofing and Gypsum. Cementos Molins is a renowned spanish cement company with an annual revenue of Euro 485 million and net profit of Euro 70 million. Operating in Spain, Argentina, Uruguay and Mexico, it produces Portland and Calcium-Aluminate cement, Concrete and Precast concrete, Aggregates and Special purpose mortars.Lafarge Surma Cement Ltd. will extract and procss the basic raw materials like limestone and shale from its from its own quarry in Meghalaya, India. A 17 km crossbred belt conveyor will be installed to link the quarry with the cement plant for transportation of raw materials. Heidelberg cement Bangladesh Ltd: Heidelberg Cement...